Of the markets. We will break it down with tiffany mcgee. Plus an exclusive interview with the ceo of halliburton, jeff miller. With oil prices around 40. Guy lets talk about the data. The data was grim. Worse than anticipated. As gdp data was bad but not bad as anticipated. The real story for me today is the claims number. Higher and looking fairly sticky. Now. Mckee joining us point out the highlights. Ofwe basically had two sets numbers. One that told us where we were and one that told us we may be going back there again. When you look at the gdp numbers, the number the u. S. Uses is 32. 9 . The entire last for year, we would be down 2. 9 . 32. 9 . 10 quarter over quarter. That compares with germanys 10. 1 , the u. S. Is 1 10 of a percent better. It shows the u. S. Global economy is in a lot of trouble. Where did it go wrong . Personal consumption was down 34. 6 percent. This was an annualized number. ,usiness investment nonresidential, down 27 . In all across the board terms of gdp. I want to show you a chart, if we can pull this up. The gdp number, and this is the thing that matters the most. You look at the dollar figures are gdp. If this chart comes up, that shows you what happened since the end of 2019. We are down by 11. 7 . To make that up, we need a much bigger gain in the next couple of quarters or in the next couple of years to get back to where we started. You look at jobless claims, jobless claims up again. This time, now 1,434,000. Upyou point out, they were last week. People are losing jobs again. That was the point that jay powell made repeatedly yesterday. While we wait for washington to get something done on stimulus, the outlook of the future does not look any better than where we came from in the past. Alix it is such a great set up. Bloombergs michael mckee. That unemployment benefit, 600 is over tomorrow. The Economic Data is stalling out. You can imagine it may only get worse as stimulus talks continue. Jay powell emphasized the need for support of policy in his remarks yesterday. The path of the economy is going to depend, to a very high extent, on the course of the virus and on the measures we take. To keep it in check. The fiscal policy actions have made a critical difference to families, physicists and communities across the country and it will take continuous support from both monetary and fiscal policy to achieve this. Alix joining us is mark. Always good to chat. If we dont get something from d. C. , what does that mean for thirdquarter growth that we thought would get better . It means it will be extraordinarily challenging. Congress faces a real fiscal cliff in terms of the exploration of the enhancement of Unemployment Benefits that are expiring tomorrow. If congress does nothing and just lets those rolloff, you will see a sharp contraction in overall consumer activity. You will see a significant pullback in Consumer Spending and you will see a worsening of the Overall Economic outlook. The market is very in tune to these negotiations. I think the widespread expectation is something gets done. It would be incredibly politically unpalatable to have the on and limit benefits expire and experience that type of Economic Contraction and go into a worsening third quarter, when you are a few months away from a general election. The market certainly believes there will be some type of fix that is coming. If it does not happen, that will be an unpleasant surprise. The market expectation is that it absolutely will. Expectation is that. It is not a zero poplar probability that it does not happen. We have seen congress does not do the first the right thing the first time around, how do i hedge that risk . We have the sour data. It could also be that there is a little bit of unease in markets. That there is not more progress on the fiscal side. We were hearing yesterday that the two sides are still very far apart. You would think that that gap is going to narrow quite considerably in the next week or so. Congress is set to break on august 7. And there is certainly the expectation that something will get done before then. If it does not, you are looking at a much more challenging thirdquarter. Some of the progress that has been made for the last few months would be at risk if those benefits are not continued in some form or fashion. Alix the fed has always had the back of the markets. Had the reaction function. Are you going to have to become an Equity Analyst if the fed does not buy equities . Feel like a hundred percent was off the table. That is not something the fed is considering right now. What we learned is that the fed is comfortable with the stance on policy. There was not much guidance provided on what the next steps might look like. Chair powell talked about former guidance. He talked about how there is no clear shipment strategy that is coming with regards to asset purchases. We know that those are things the fed is considering. We know we will hear more about over the remainder of the summer. It seems like equities are not one of the things the fed is focused on right now. When you look at overall financial conditions and how the equity market has been, it is no surprise. The fed is thinking about how they can do more and what more would be appropriate. They will focus on former guidance, asset purchases of treasuries and mortgages and potentially your yield curve control. Chair powell was not ready to provide too much guidance yesterday. Guy how would the u. S. Treasury market react to a contested u. S. Election . Not well. You are seeing potentially a preview of that today, given this mornings trump tweet about potentially delaying the election. That is certainly a risk that the market is going to have to contend with as we move closer to november. I would think that it is safe to electiona contested would be negative for risks. It will push rates lower. It will probably be negative for the dollar. It would certainly increase volatility. At a so, are we looking shortened negative . One of yourthink is worstcase scenarios in what happens to the treasury market . In the worst case scenario, you can see a 2 10 curve inversion with the front end squarely at zero. You could potentially see mediumterm rates, longterm rates move significantly lower, if not potentially into negative territory while the front end of the curve is still probably sticking to the guidance that the fed has no desire to take rates negative in the future. That would be the worst case. Risk, you significant would be considering Something Like that and having the market almost force the fed to think about negative rates much sooner than they would want to. That is not our base case by any stretch. Given the feds guidance that they want to keep rates in positive territory, that they dont want to consider negative rates at present or in the near future, if you were to see a significant risk off, you could move the 10 year to be in line with the twoyear. If not, it would be in inverted territory at zero. That would be a very troubling signal for markets. A troubling signal for the fed and something that the markets naturally want to see avoided. It is not inconceivable. Not our base case by any stretch but not inconceivable. Appreciate the market volatility is nailed to the floor. You would normally think about september or october into the election, do i need to be buying volatility out of the election . Volatility out of the election, i would think into mix a lot more sense. We dont know what the outcome of the election will be, we dont know if it is contested how long will that period be. Is an safely assume there real risk of higher volatility into that. We will know more the day after the election. We dont know if this will be a close election or if it will be a landslide in either direction. The market needs to wait and see that. Around that point, especially after the commons we have recently heard, i think it is a reasonable thing for Market Participants to consider. There is the risk i would say coming out of the election that if it is decisive in one way or the other, if you see a clean sweep by the democrats were by the republicans, the market is going to quickly transition to focus on what is the plight of policies we can anticipate. If you get a clean sweep one way or the other, one of the first things the new congress is going to focus on is fiscal stimulus. We would expect that there would be some type of very meaningful fiscal stimulus coming in the early days of whatever the new congress and potentially new administration might be. I think that that is where the markets focus will be once there is more clarity. I would imagine that you want to heading into the election. After that, if it is decisive, you want to think about how much fiscal stimulus is coming and what and for the bond market, it means more supply. The bond market would be thinking about what is the tradeoff between the Growth Outlook and all of the supply that is coming down the pike. That is where we think the market focus will be. Curve steepen the out once we get some clarity as to what the election outcome means. You. Mark, thank mark cubana of bank of america. Coming up, we will switch to tec. Facebook, google, amazon and apple reporting after the bell. This after the ceos were grilled on capitol hill. Hile you still want to hold that is next. This is bloomberg. Guy from london, i am guy johnson. Alix steel in new york. This is bloomberg markets. Apple,s of tech giants amazon and facebook indoor questions from u. S. Lawmakers for more than five hours, accusing them of having too much power. These companies that exist today have napoli power. Some need to be broken up, all need to be properly regulated and held accountable. Joining us now is tiffany mcgee. Giving us her take on what is happening. Did anything yesterday change your view of these companies . Tiffany good morning. No. Like watching a show. When it comes to these companies, each one of them has their issues. With facebook, it is there competitors. With apple, it is control of apps. With google, control over research and with amazon, it is leverage over thirdparty sellers. Amazon was up 63 at the end of the day. So far, apple is up 29 . 500 is just about. 5 higher for the year. Represent 34. 5 of the nasdaq 100. We are talking about huge mobile and while they have their issues, they are not going anywhere. Greatthis is such a point. The way that you screen investments is through an esg lens. That is a little typical. When you have the privacy concerns with facebook and what they are doing in terms of the administration and you have amazon gets flack for the way they treat and pay workers. You basically said you have to own them. How do you swear those two things . A couple of things. At portfolio construction through an esg lens. What it is is taking these responsible environmental social government contracts and lining them with what you would use to make an investment decision. Regarding the data around these companies, each of these companies we are talking about, the esg metrics are different. You can take a company like facebook and their issues are around not limiting hate speech while amazonation, has an issue with their employees. When you get down into the nittygritty of assessing these particular metrics and trying to identify whether they are going to limit risk or they are going to help you identify, what we see is there have been studies on this, in particular by goldman sachs, they just upgraded or added to the study this morning. Amazon andany like their treatment of employees, if you study that metric, we are looking at a particular policy. Lets say they have a policy where they are going to commit to improving the conditions of their workers. Just saying you have that policy does not generate outcome. If you just say it and do not do anything, it identifies underperformance. What we do is retract the metrics of the results of that. What we are seeing is when a company like an amazon makes a policy and follows through and has measured progress, those companies tend to outperform. You have to look at these different metrics and evaluate them a little bit differently. Versus a facebook, where facebooks issue is a little bit different. They are dealing with an issue of racial hate speech in a climate that is extremely sensitive to that. I dont believe that they have a very long time to get this right. In particular, certain issues and linkednsitive to to alpha our community relations. Depends onbook, it the type of company. Companies that have that are either in highly regular did industries or industries that touch a lot of people and have a huge impact really have to get this right. I would count facebook as one of them because it is one of the largest. These companies are not popular on capitol hill, these companies are not popular in d. C. They are likely to face a more difficult operating environment. Help difficult does it become how difficult does it become . If we do see tax rises, how that infect affect the Investment Case is around them . Tiffany we were talking about the election. There is clearly uncertainty around that. We know dont know how thats going to go. If biden is elected, he has been vocal about how he feels about facebook. He has definitely talked about section 230, which talks about Online Platforms and how they for breach of contract and he would explore that more. That would affect a company like facebook. It clearly affects their bottom line. Also on the tax front, in particular, bidens tax plan would cut S P Companies earnings by 12 . On the flipside, he actually might his presidency bring more stability for stocks in contrast with trump volatility. Alix good to catch up with you. Interesting take on yesterday. Tiffany mcgee of momentum advisors, thank you very much. We have been talking about the earnings season on both sides of the atlantic. Here to break down is abigail. As tiffany was talking about, we have the question of whether the stocks are priced to perfection too far, too fast. The new york bank complex overall has been a double trough peak. At 35 climb a 35 percent climb since may 1, when they last reported. The basic tension has to do with the huge move higher and what we are expecting the june quarter. It is not so great. We are looking at an earnings decline in growth yearoveryear , especially amazon down 34 . The stock is up 40 . Will guidance match what investors are looking for . We will know later today. We have ups at a record high. They put up a huge quarter, beating earnings by 99 . Stayathome is benefiting them. They boosted as well but they talk about writeoffs and investors not liking that. Png and qualcomm, we see those stocks higher. These companies, the growth yearoveryear falling. Guy fascinating to see how the markets are reacting to all of this. Abigail, thank you very much indeed. Ok, lets talk about what we have coming up. A commercial break. This is bloomberg. Guy welcome back. You are watching bloomberg markets. To n johnson is the vaccine protected a group of primates with a single shot. This is according to a study being published in the medical journal nature. We are progressing quickly. None of these vaccines, at least in the short term are going to provide the silver bullet. They are not going to give us the immunity we are looking for in the shortterm in terms of herd immunity. It will be interesting, we will be talking later on to lily. For morey are looking of the medicines. Coming up right now, we will be talking to terry haynes, about trump. This is bloomberg. Live from new york, i am alix steel. This is bloomberg markets. A sequence of events. We get really bad gdp data. Bad jobless claims. Not falling as we expected. Then we get a tweet from President Trump saying 2020 will be the most inaccurate and fraudulent election in history with mailin voting. He suggested delaying the election until people can properly, securely, and safely vote. How did you understand this tweet . He cannot delay it . That would have to come from congress. Putting that aside, how do you understand the week data we saw in the tweet 40 minutes later . You are right he cannot delay the election. From their perspective, it is a useful exercise because you can bucket in under a bad economic day anyway. It is kind of a dog whistle. To gin up the base and expose corruption from their expected. You get trump saying those things, you get the initial Mainstream Media press reaction that all of this is completely unsubstantiated, the word has been used in the press already, and then you get the second wave which is, really . There is a lot of live Election Voter fraud. Whatwhat you get is ok, so are they doing about male inns new states . There are not enough safeguards, a point trump has already made in court. Focus in the a mailings might be a little shaky. It is a useful thing for trump to do. You tuck that into a day where it would be bad news anyway and it will not affect the market. You made a bunch of assumptions. How worried are you that we will not get a clean result or even if the result is clean, that we could have problems after the election. Is clean, we do not have problems. Contested,ose or this will go out for a while. Every indication ought to be that we will have a close and contested election were nobody exactly who the next president will be. Today, i anticipate it would. Give us perspective on, does this influence what is done today . Ofra unemployment checks 600, they ended tomorrow. What we heard yesterdays both sides are part. 1. 75 trillion, the final package. Work expands to fill the time allotted. After that, you will get into president ial conventions and nobody wants that. I will look at mid august at the absolute latest. A smart question here because both sides are jockeying for a smart decision in a close election cycle. That will string out the time for the final deal. Said since have sunday that it is highly likely that what you end up with is a shortterm patch on Unemployment Insurance and other things that expire to calmt the political waters and markets until you get a final deal. I do think there will be a patch, almost certainly. I will never say never to things falling off a cliff, but i think it is unlikely. There is no political upside for either party. What was in the package . Liability . , whattious at the moment else is in there . The final package, as i say, is between 1. 5 and one and three quarters trillion. That includes Unemployment Insurance extension. Formula. A simple what you will have is the ,urrent programs continue programs, is ppp, fed and the fed already extended till the beginning of the year and still had money on them. Those things get extended. I always thought the linchpin was the liability reform. The tough part. That strikes the heart politic