We spoke this morning and we dont know how much they are paying for this vaccine supply. We dont know whether they will have the right vaccine so many questions on how administrations and i ministers at access to vaccines for their citizens. Tom the virus dynamics are just particularry, make note of the glide path of texas and south carolina. In new york city with our first word news here is ritika gupta. InsistsMitch Mcconnell that businesses, schools, and other organizations be protected against coronavirus lawsuits which is talking down talks over a new stimulus package. Changes inding that Liability Law be included in the legislation. House Speaker Nancy Pelosi says that shows he is not serious about a deal. Federal reserve policy makers will focus on how to jumpstart a rebound from the recession. Almost certain to keep their benchmark rate the same. The fed will make a statement at 2 00 p. M. New york time. Jerome powell will make comments 15 minutes later. Amazon Ceo Jeff Bezos plans to Tell Congress his company is an american Success Story with a relentless focus on customers. The worlds richest person will strike a patriotic turn for his appearance before the house antitrust committee. Ofwill be joined by the ceos apple, facebook, and google parent alphabet. Coronavirus pandemic and political unrest in hong kong extended its first recession in a decade. Their gdp fell by 9 in the Second Quarter. The Unemployment Rate has risen to a 15 year high. Global news 24 hours a day on air and on quicktake on twitter powered by more than 2700 journalists and analysts in over this istries. Bloomberg. Tom equities, bonds, currencies, commodities, weaker dollar is a story here. At 25. 19. The real story is the weaker 95. 95, settling down to 93. 5. What does a 130 sterling mean . Francine they are looking at brexit. We understand through our own there doest publicly not seem to be a way forward in terms of talks. Talks are progressing and may be going better than expected. All theseking over markets that seem to be fluctuating. You are 100 right, it is all about the dollar with Gold Holding Steady with recent surges and the treasury as a treasury edging lower. Tom Kevin Cirilli gave us a perfect brief on what would not occur on tuesday. I believe we have 100 certainty that wednesday follows tuesday. Our chief washington correspondent, kevin, we went to the ballet this morning yesterday, what is happening this morning . It is aer pelosi says nonstarter for Mitch Mcconnell to insist that Liability Protections are included in stimulus talks. I was speaking with democrats who seem to be receptive to the idea of having some tax credits for businesses with Strings Attached, particularly Strings Attached meaning there would not be furloughs or layoffs at the end of the year. As it moves forward and so much of the news out of washington this afternoon will be from the house hearing with big tex ceos. With regard to the stimulus, i think the next Major Development will be if there is a significant breakthrough. I think it will come between the Treasury Department and speaker betweenefore it comes posey and mcconnell. Tom who is driving the bus . Mcconnell. Based on the conversation we have had for weeks about Political Capital from the white house. The lack thereof, that is the perception among democrats. As a result, you are seeing republicans in the senate and house are feeling emboldened with their own negotiation strategies in order to move forward. Quite honestly, this is based off of so many conversations we have had for the past couple of weeks, i think the pelosi camp would rather deal with the Treasury Department than to deal with the senate. Is a calculation that mcconnell would be able to get in the next couple of days more of his caucus on board. Francine kevin, good morning from london. I have been trying to keep up to speed. Bigger between democrat and republicans on what should be done or between fiscal hawks in the Republican Party and those who are more moderate . Its a political one to punch. The first step to getting across the finish line will be for leader mcconnell to unify his party. I dont think the Republican Party a whole in the senate would throw a massive wrecking ball into the chances of a another round of stimulus getting done by august, by the august recess in the next couple of weeks. They are able to get the votes it will become a partisan fight. You are seeing Speaker Pelosi have more of an interest in dealing with secretary mnuchin than leader mcconnell. Francine how quickly can this be unlocked . Kevin the next step in the process i am looking for is whether or not there is any type of major break through. Speaker pelosi saying Liability Protections are a nonstarter. Areerms of the process, we in the thick of the negotiations. When there is a breakthrough at the negotiations i would anticipate with that between now and next week. It is washington, and the drama never stops. Kevin cirilli, our chief washington correspondent. Coming up, a conversation with fauci oner she mr. The serious of the cases, dynamics, and deaths of the coronavirus in america. This is bloomberg. It is about economics, finance investment. Its about International Relationships and politics. The arc of all of that is about labor and jobs. Francine lacqua and london and i am tom keen in new york. Us, thentner joins thing that ties it together is the labor economy like we have never seen in the time we have been together. What is the employment rate going to be into the end of the year and in the next year . Unemployment rate has come down sharply in a couple months as we have brought a decent chunk of labor back to the market. , but it is really slowing. Its going to be sluggish from here forward. We think it is going to be still near 10 by the end of the year and could be around 6. 5 percent by next year, still about three Percentage Points above next year compared to where we were going into covid. Lieutenantke to the governor of new york state yesterday, and she was heated that the Unemployment Rate in buffalo is 16 , and really publishing 20 . What is the number above that . Areas it is going termsy closer to 20 in of a complete measure of underemployment. You are going to have some states that are more heavily weighted towards industries that will be slow to come back. Weighted more heavily towards leisure, hospitality, and those discretionary, high density services. In any of those states not only will the Revenue Streams be weaker, but there will be less chance compared with other more balanced states in terms of their industry mix that will determine how many folks they can bring back to the labor market and how many jobs they can create on top of that. Francine what do you want to see in a stimulus package that would help with the weakest parts of the u. S. Economy . Ellen first and foremost, its a great question. Perspective,mists help for state and local governments has to be there. They cannot run deficits in perpetuity like the federal government, they have to run balanced budgets. I started out my career working thehe states, so i know dynamic well. You have to balance the budget which means you have to write size labor at the state level. 80 of the budget is labor, which is why the hammer always falls on labor. To keep jobs from a coming draconian, they need help shoring up revenues. On the others i would focus on the extended unemployment benefits, that federal program, that 600 a week supplement. I would love to stop beating around the bush and extend it. Extend it because the Unemployment Rate is still in double digits, it is not the time to try to wrangle and delay in order to find tune the program. There is not enough time for that. It has already expired and we are looking at several weeks of gaps for income for households that they started preparing for in july. We can see that in the data in the last half of july. I think we have to get that thing passed, our Public Policy strategist think it will happen in the first week of august but we dont know the fine details or the contour of that package. Is thee how much more u. S. Economy going to need longerterm . Lets say that package is approved, what happens in 12 or 18 months . Ellen that will depend on the outcome of the president ial election. An administration starting off in 2021 is going to need to transition away from Emergency Support in a time of covid two how can we put in policies that create a sustainable path and growth for revenue. That does mean more spending in order to get that. That does mean Something Like Infrastructure Spending that is probably the one thing that does ultimately pay for itself and creates rod activity, jobs, income, revenue. Those kind of sustainable policies mean that we are still going to see deficits rise even if we go into a regime of higher taxes there is still going to be more spending. Zentner, i cant believe we have hardly talked about the fed today. We listen for in the press Conference Today . Ellen overall, i will be gauging what comes out of the fed. It has to be dovish, how dovish is it . With the rise in covid cases fiscal policy is uncertain going into this meeting. There is no pushback on markets they need to do. I think everyone expects a dovish tone, i am looking to the degree it comes across in the queue and day with chair powell. We are looking for them to begin the process of setting up a change in framework that will, in the september meeting where they even more firmly tied policy accommodations to economic outcome. Very firmly saying, we are not going to raise rates, we will continue Balance Sheet policy until the Unemployment Rate gets this low or inflation gets this high. Something firm that sends the message to markets of just how long policy accommodations will remain in place. Be intcome could september that it remains in place, the message sent will be that it will be in place longer than markets have it priced in. The hints will come in the queue of this q and a meeting. I think jackson hole being virtual and open to everyone will be interesting. Tom well said on jackson hole, that will be fascinating. Ellen zentner with us as she will continue with us. So much more to talk about with the american economy. The fed decides, Caroline Hyde leading our coverage on chairman powell. Michael mckee with his expertise as well. This is bloomberg. Francine this is bloomberg surveillance. Conversation, our is ellen zentner, Morgan Stanley chief u. S. Economist. Thank you for sticking around and talking about the fed and stimulus. When should we start worrying about inflation . To worry dont have about inflation for quite some time. For this year and next year i well above consensus and where the fed is. Some of the data that we have has a faster recovery next year built in post vaccine with a lot of stimulus behind it. We dont have to worry about it, we should embrace it, because it is not going to beg a Monetary Policy response. That is where the issue with inflation came in, what will it say in terms of the fed pot reaction feds reaction. Getting to 2 is not good enough. We have higher inflation, but we dont think we need to worry about it. Actually have we some sort of Forward Guidance today . We heard from a fed governor calling what we are living through a thick fog of uncertainty. Those Forward Guidance help in these cases . Does Forward Guidance help in these cases . Ellen they put in how long to expect rates to remain low, and terms of Balance Sheet they say rates will remain low for quite some time. They will do 80 billion purchase at a minimum openended for as far as i can see. That could ramp up, and that is something chair powell has reminded us of. That is the Forward Guidance that is in place. They wont be rolling out something new at this meeting, but they will be furthering those discussions. That is what we think will dominate and has dominated their conversation. Opinions have moved towards a consensus on how to change their framework in order to issue a statement providing more firm Forward Guidance. They are not there yet but i think it will come up in the a. Ue and day q tom i want you to play securities analysis. Downe ge aviation orders 50 , health care down 18 , ge power down 42 , Ge Renewable Energy down 19 , these are unit dynamics we have never seen. What does that mean for corporate confidence to capex, which creates jobs . This isverything about something we have never seen. The we are seeing now is strength in the economy that we are seeing in the data, data improving sequentially, is coming in the areas of the economy that were hardest hit. Tom i dont mean to interrupt, but this is critical what you said. Are we looking at the first derivative dynamics or looking at getting back to a new level that is below the level we knew on valentines day this year . Ellen the level is going to be lower. It is getting back to what we normal, in that even after we have prepared, even after we have recovered you are going to have a hit to potential growth. You are going to have a hit to labor force participation. To thevery easily come conclusion that there is going to be some amount of permanent job loss. This is what terrifies us, we dont have a view on that. We dont know how much job loss will be permanent especially while fiscal support continues. Hopefully long from now when fiscal support has faded the and the economy can stand on its own we can gauge what some of the more permanent and lasting damage can be. There are other areas of the economy that is not a bad place to be in when we have had such a massive, shocking hit to the economy. That is what we have to bear in mind. Of things improving now are improving off of a low base. We have yet to find out what our footing is and we have to be patient on that. Thank you for joining us francine thank you for joining us, ellen zentner, Morgan Stanley chief u. S. Economist. Join us for our special on hong kong at 7 00 p. M. On friday, will later on london time then it will air throughout the week. Join us for another special at 7 00 p. M. Tonight, the focus will be on any kind of Forward Guidance. We were just having a great conversation with ellen zentner. The markets are focusing on the number of infections. We are hoping to have more news from the fed which is why the dollar is dipping. Stocks are fluctuating before the Federal Reserve policy meeting. European banking stocks are falling after worse than expected news. This is bloomberg. 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. Bloomberg surveillance, nasdaq futures look nicely. Upures up seven, dow futures. I am watching the turkish lira as an oddity. Ofthe oddity of the collapse industrial america, we just saw General Electric out with challenging earnings. Brooke sutherland joins us writing on the strength of industrial america. 3m the other day, ge today, massive unit decline in their operating businesses, can they cut costs fast enough to keep up with the unit collapse . Brooke they are certainly trying. Ge more so than a lot of other companies. Is undertaking a big transformation of this company and the coronavirus is throwing a wrench in his plans but arguably accelerating them. If you look at the costcutting they are doing in aviation, that is one of ges stronger segments, but not an area they were looking at cutting costs in the past. When i talked to larry about firstquarter earnings he said that as an opportunity to bring this forward. I dont know if anyone would have expected or wanted the hit they are taking in their aviation department, but they are aggressively trying to cut costs. Tom power was not good as well. Minnesota manufacturing and lighting, i know these are changed companies, is there an attitude that you see in your reporting that they have to really cut costs by 10 to 15 amounts, or is this a variable event where they get back to normality next year . Brooke it depends. Areou are in aviation, we seeing aggressive cost cuts even from companies that were not cutting in april and may. Honeywell and raytheon came out with heavy cost cuts that are somewhat in line with what you see from ge and boeing. When you look at the other end of the spectrum, 3m struck a note of optimism when they were talking about overall sales in july being up by a low singledigit percentage so far this month. They have a broadbased recovery. Talking automation about rolling back the pay reduction they had to take for their employee base. They expect to do that by the end of september. Union pacific bringing employees off of furloughs. It depends on what part of the manufacturing economy you are in. Aviation is a tough place to be, and there is no light at the end of the tunnel. They are trying to monetize their position, what does that mean . Brooke they have been in the process of trying to wind this down. They have done to pretty big sales. Those have not been the most ideal prices, i would say continuing to wind that down means they have accepted the reality of where that is trading and they want to be done with this and get out of it. They want to monetize it and bring in some cash. Tricky to timebe the market and really sort of get to the price that may be were expecting. I think those expectations will have to come down with the trading we have seen with baker hughes and other providers given the dropoff in demand from the coronavirus. Francine thank you so much, terrific briefing. Geing up later, larry culp, chairman and chief executive officer. That conversation is 12 00 p. M. In new york. Lets get to the bloomberg first word news. Here is ritika gupta. Ritika Mitch Mcconnell has drawn a line in the sand on a new stimulus package. He insists that changes in Liability Law be included in the legislation. That has bogged down talks between president trumps representatives and democrats. Speaker nancy pelosi says Mitch Mcconnell is not serious about reaching a deal. Mixed news on the coronavirus in the u. S. , florida reporting a Record Number of deaths but new infection slowed down in two states grappling with outbreaks, california and arizona. The positive test rate in texas fell for the first time in months. The Trump Administration and the office are inrs talks about pulling federal troops out of portland. The state would have to beef up law enforcement. There is talk of sending more agents to portland because of the protests. Joe biden says he will pick his Vice President ial nominee next week. He tells reporters he will let them know as soon as he does. The democratic president ial nominee has pledged to poke a pick a woman running mate. His list of candidates includes four black women among others. Global news 24 hours a day on air and on Bloomberg Quicktake powered by more than 2700 journalists and analysts in over i am ritika gupta. This is bloomberg. Tom its extraordinary how nonfed this fed day is. We just heard this from ellen zentner. You althrilled to bring broaddus, legendary at the richmond fed, on this legendary deficit we have and what this means for the fabric of our Federal Reserve system. This is bloomberg. Tom bloomberg surveillance, good morning. London and iua and am tom keene in new york. There was aond fed gentleman named mr. Black, then there was al broaddus, the character of the richmond fed will always be al broaddus. You have never seen a deficit like this. How has the deficit growth, deficit sustainability, the deficit reality we have, how does it change the dialogue in the building . None of us are comfortable with these deficits, that is for sure. Recognizedis well that this is just a really unusual situation and people talk about this endlessly on your program and elsewhere. You have to deal with it with policy in a really wholesale way and they have done that. So far the progress has been good. I think the general thinking around that table is we are not comfortable with these deficits but we are going to have to live with them for a while and hopefully we will deal with bringing them down. Where the Economic Situation gets to a point where we have the opportunity to do that. Of thee academics richmond fed has been so varied and interesting, but if you atlanta, andond, the Dallas School there is a huge body and the American Public that is grievously concerned about deficit buildup. Can you support trillions of dollars of additional stimulus to overlay over what chairman powell is doing . This point we dont have a lot of choice. I think many of the most recent statements by the reserve bank foridents have been calling continued fiscal stimulus. I think there is going to be some concern at the fed about thisifficulty of getting Current Division between the house and the senate directed and done. That is going to add to the deficit. We are not used do it, we dont like it. Until weo live with it get a good solid floor under the economy. Hopefully the path of the pandemic will make it possible to do this with less future further buildup removed through the second half of the year into 2021. South, we have to be prepared for that. What is happening now is we are trying to prevent that from getting worse and that is job one. I dont like and deficits, i think you know that. I dont like the potential longerterm inflationary implications of high deficits and of the fact that the fed is essentially monetizing a lot of this. You have to prioritize. We have to get the weakness in the economy so we can look forward to the day where we will see more growth in the economy and deficits will naturally begin to go down. Francine when will we see a much stronger u. S. Economy . Al good question. A lot of that could depend on a mixture of possibilities. I think it comes back to the path of the pandemic. Think it was the dallas fed of the chairman reserve Bank President s said maybe it was eric in boston made the point that the best economic tool now is the things we are trying to do to get the pandemic under control. Hopefully we will have some success. We had a tough time through the last couple of months with that and not much success. Data i the most recent yesterday, maybe a bit of progress in the Southern States towards easing the case increase. That would make a huge difference and make our job a lot easier and make the day where we begin to grow again come sooner rather than later. Francine you mention you are worried about inflation and the deficits. When do investors start worrying about that . Al some investors are already. Orrying about that idont want to suggest that think inflation is a clear and present i dont expect what we would like to see is an increase in the underlying trend of inflation. Closer to the 2 target, i think that would make Monetary Policy a lot easier. To see a movement in that direction at some point, probably more than a year or further down the road and we could begin to see some upside risk on the inflation side upfront. That is for the future. You have to look forward and be aware of it, that is something the fed will have to deal with in the future. I think the key thing bringing it closer to the 2 target. To give you a long answer, the meeting is going to be discussing the kind of strategy it wants to follow to ensure that Something Like that happens. We will have an inflation target of 2 , but there will be discussion of the possibility of going to average inflation targeting which would allow the inflation rate for a period of in orderove above 2 to get us a better inflation track. Francine thank you so much for joining us. He is the former richmond fed president. State with us for our special coverage of the fed. That is at 2 00 p. M. In new york and 7 00 p. M. In london. Barclays traders had an especially successful Second Quarter. The Bank Securities division reported a 60 gain in Foreign Exchange rate and creditrating. They took a 1. 6 billion pound charge to anticipate bank loans for the crisis. Bringing their total to 3. 7 billion so far. Here is what the chief executive had to say. Been anly there has extraordinary Economic Contraction globally, but particularly in the u. S. And in the u. K. , our two principal markets. We have taken including the one point 6 billion pounds in the Second Quarter. The vast majority of that are derived by our risk models where we put economic forecasts into those models. Future Unemployment Rates, gdp models produced those impairment numbers. We think we have been build properto impairment reserves, lets see how the economy is, particularly in the u. K. And the u. S. Unfold in the next couple of quarters. We like the comfort of having andng impairment numbers maintain probably literally profitability for the bank. I am looking at your investment business, Equities Trading up 30 , the question is, could barclays keep this up . Jeff we have had good performance and our markets business over the last couple of years and the last couple of quarters. Like all the banks that have therted thus far, volatility in the first two quarters was exceptional this year and people are expecting a degree of normalization. Income credit and currency trading up 60 for the Second Quarter and 80 for the first half year overall, we think we are gaining market share. We want to see it stay open and clients like our Insurance Companies and Pension Funds that underscore the Capital Markets. I think what we are seeing is in part the result of a lot of regulatory changes over the last decade. If you go back to the crisis of 2008 or 2009 it was based on bank Balance Sheets getting in trouble. They have moved the focus of financing Economic Growth from banks to the Capital Markets. To Companies Issuing debt and equity that is really the story of the first and Second Quarter, the resurgence of the Capital Markets led by massive amounts of liquidity provided by central banks. I think that has proven to be a constructive response of the pandemic and the consequential economic crisis. I want to ask about the dividend. The report says discussions will happen at the end of the year, but are you talking to the regulator about bringing the dividend back . On,hat we have all settled and the decision around the dividend early on in this year given the Enormous Economic uncertainty we are faced with, we dont know what the second half is ultimately going to mean for the economies and the bank itself. Move outnt program to of the Fourth Quarter of 2020 discussions about Dividend Payments in 2021 is prudent. We will have those discussions with our board first and foremost, but also with our regulators. We will leave it towards the end of the year to try to make a determination as to reinstating dividends next year or not. Was the chief executive of barclays speaking to us. , johns, lauren sauer hopkins professor of emergency medicine. This is bloomberg. This is bloomberg surveillance. As we continue to track the virus, bloomberg has developed a partnership with a leading authority on covid19, Johns Hopkins has been leading the international response. We hear from experts in public health, infectious disease, and emergency preparedness. Lauren sauer. Ir theook at moderna and efforts to find a vaccine, our way closer to finding one now than we were a month ago . Then we were a month ago . Lauren we are closer and the data coming out from trials looks good. The moderna and pfizer just started their phase three trials, they are mrna vaccines. These are brandnew technologies, we have not have one have not had one that has gone through all three phases before. Moderna is new to bringing vaccines to market and has received a bunch of money from operation warp speed to push this forward quickly. I think everyone is anxiously awaiting phase 3 data from these 30,000 person trials. Toocine overall, is there much hope in a vaccine . Are we falling ourselves in thinking we can have one as quickly as some commentators think we can . Being there are numbers thrown out that people who make vaccines for a living dont think are realistic. All the resources are going towards this effort. The key is to make sure that the rest of the supply chain that supports the science is there and ready to go. Ensuring that we have Manufacturing Capabilities and plants with good Manufacturing Processes and safe capacity to create the vaccine are ready to roll, that we have those files, we have the infrastructure in place to distribute the vaccines broadly across the globe. All of those are critical elements and any one of them could slow down the process. Francine will states in the u. S. Be ready to reopen schools in september . Lauren its going to be a statebystate situation, even a county by county situation. We have to be careful about reopening schools because we dont fully understand the role kids play in the way the virus spreads. We also have to protect our teachers and families of students who may have comorbid conditions who may be vulnerable populations and may be more directly impacted. The guidance came out from the white house and the cdc recently and it does push to reopen schools and give us a lot of tools that will help that. Are manyg said, there hotspots across the country that do not look ready and one of the key lines hidden at the bottom of the reopening document is work ifs will only Community Transmission is slowed. Francine thank you for the time. Out vrus ck on the bloomberg. Join us for our conversation with Johns Hopkins experts. Westinup, tomorrow david will be speaking with anthony fauci, i. Anthony conversation you dont want to miss. Weve achieved liftoff. The real problem is traction. You will see some investors begin to dig some chips off the table. You are already seeing it in futures data. Willhope that policymakers recognize that fiscal has to do more of the heavy lifting in terms of supporting the recovery. This is bloomberg surveillance was tom keene, jonathan ferro, and lisa abramowicz. Jonathan from new york city for our audience worldwide, good morning. This is bloomberg surveillance. Alongside tom keene and lisa abramowicz, im jonathan ferro. The big three events down in washington, d. C. , the Federal Reserve decides, the fiscal talks continue, and tech hearing s commence at midday. Tom what i would think pieces it altogether is the American Labor economy. Cofounder