Gold breaking out, comfortably three 2000. Lisa which is interesting because you are getting a risk off deal. You are getting a risk on feel. The private payrolls expected to have a modest rain at 8 15 am, not including the state and local government jobs, which are expected to state weaker performance. The financingget plans from the treasury department. At nine 45, we get u. S. 9 45, wepmi data at get u. S. Services pmi data. Jonathan lets get straight to the price action. We wake up from the tuesday snooze fest with some moves. The euro out to 1. 1834. Yields lower yesterday. This morning, up to 0. 53 . Thats the price action. The question of this morning in the keene household, in early september, tom keene has arranged for a day off. 29. 99 on spending mulan . Tom we celebrated the Disney Release last night by 2. Atching frozen not as good as the first one. Jonathan i saw the big news up front early this morning. The trading week does begin on a wednesday. The data coming out later. Ims tomorrow, pays roles claims tomorrow, payrolls friday. To a now is jason draho, ubs head of technical asset allocation. Positionedare marryin remain to the upside . Jason Big Tech Companies certainly got the headlines across the board. The what is notable is guidance for q3 has actually gone up 3 . The overall earnings outlook is showing pretty solid improvement. Markets are looking through the weakness we had an second quarter, probably priced more for 2021 earnings. That is a positive. Data,e seen some mixed recently concerns about slowing growth in the u. S. Because of increasing virus case counts. But the virus curve is flattening, and we are seeing some signs of mobility pickup and some of those states. Markets are price potentially for a vaccine solution. Do we actually get confirmation . I think theres more upside from that. Tom you have some serious face time with Robert Schiller of yale on the path to your phd. What kind of exuberance is this equity market . Jason i think it is not that exuberant. There are certainly pockets of it, but on the institutional side, when you look at the overall sentiment, i would still say it is relatively modest to ,eutral, but it is not euphoric certainly not in terms of the real money managers. Investors continue to position for a recovery. Lisa there is a raging debate in the bond world, a question of why benchmark rates are so low. Is it because of the Federal Reserve buying bonds, or is it because the expectation for growth is so low that this is the yield that is justified, and it matters in terms of what you feel with respect to risk assets . Where do you fall on that debate . Jason i think there are certainly concerns about growth, but i think it is important to distinguish between yields have dropped medically, but real yields have been trending higher. Every time theres a real growth scare, Inflation Expectations of gone up a lot. The fact that they are rising right now suggests that the growth concerns are maybe a little bit overstated. Theres the view that the fed is going to be on hold for a very long time, and therefore rates should be low. I think that is more the narrative. Just to be clear, do you think it is sustainable to see real yields stay deeply negative . Jason in the near term, if we get through the recent growth concerns because of the virus in the u. S. We think the 10 year can make not a big move, but if you look at the move in gold, potentially the dollar lower, some of that is at risk of unwinding if we start to get some sort of normalization that causes rates to back up a little bit. Macro plays out like we expect, we should see a gradual rise in nominal yields. Jonathan lets get to gold, shall we . A break in 2k. We are up 1 . Tom a lot riding on yesterday. Jon ferro was brilliant on the mathematics of nominal to real yield. Get the ubs optimism, but how do i play it instead of just owning apple and amazon . Jason theres a lot of concern that this is getting stretched. If you look at the Growth Numbers on the earnings side, you justify the valuations. This is not a 2000 kind of scenario. But within the tech space, you need to be more selective. Companies inour the Software Services area, things that have longer legs in terms of the overall growth story. What we are a little more position for on a sector basis is the cyclical rebound. Consumer discretionary, areas of industrials, things that will have lagged some of the growth rally. Tom how do you respond to 28 and 30 multiples in stocks that dont have the Revenue Growth of amazon . Youve got maybe high sink of Revenue Growth if you are lucky high singledigit Revenue Growth if you are lucky, and these are priced like half a century ago. We are definitely more selective in their Earnings Growth going forward. At this point, the tech space specifically is a little more stockpicking as opposed to outright owning the sector overall. Given how much it has moved, given some of the headwinds that could materialize, you are going to see a pullback in the overall sector. You have to be selective at this point in time and technology, which is why we have a controlled allocation as opposed to momentum from here on out. Lisa a lot of people are justifying equity purchases with the extremely low benchmark yield. If the idea of a broadening rally consistent with your idea that back end rates are going to back up through the remainder of the year . Jason i think it can be because if you get a backup in rates, that would really require actual improvement in the recovery. So a clear sign that we will get that cyclical recovery, probably have the vaccine solution rolled out by the First Quarter of next year. Then you could start to see a real, sustainable cyclical recovery. Until we get a vaccine, that is not going to happen. If that does materialize, you get a rise in real rates, and you get the other cyclical rallies. I think that is not fully priced yet. The big five tech names are up 30 . The other 495 are down 5 . So there is still scope for this rally to broaden out. That is what we assume, that we get that result, the cyclical return rate, and it is going to broaden out to other sectors of the market. Jonathan great to catch up with you, sir. Our best to the rest of the team. Big focus down in washington, d. C. Again this morning. When they say progress, i smell pressure. I smell no signs of progress whatsoever come up with the exception of a timeline and a race to get something done. Youve heard from secretary mnuchin, saying we are going to reach an agreement before the weekend maybe, possibly. Where is the breakthrough . Jason it is like stan tom it is like stan freeburg, the comedian from 50 years ago. Rumble, rumble, mutiny, mutiny. I spoke to the former treasury, and he was scathing at how both cardis both parties cant find the middle ground. You get a real affirmation that may be the middleground ground will be very important. Jonathan andy president finally asserting himself, threatening to fly solo if they dont get something done soon. Lisa perhaps that is the progress, the president saying that he will negotiate with the democrats. That might be the progress. Some idea of unity in a party that otherwise has just been really ununified. Jonathan you know who we havent heard from . Senate majority leader mitch mcconnell. Hes been silent because guess what he knows . He cant get the majority of his party on the side of a bill. Tom hes always been very good about that. Jonathan they will have to lean into the democrats a lot harder to get something achieved. Tom i think there is a british equivalent here. Mcconnell usually doesnt act until we have the votes. He clearly doesnt have the votes. But what we are hearing, including from kevin, it is really quite important, the urgency. I am going to say this, the urgency into claims tomorrow and the urgency in this jobs report. Jonathan i would agree with you. Kevin cirilli joining us in around five minutes. Later on the program, ian bremmer, Eurasia Group president. Equity futures breaking out little bit. Good morning to you all. We are higher by 0. 6 on the s p 500. From new york city this morning, alongside tom keene and lisa abramowicz, im jonathan ferro. This is bloomberg surveillance. Ritika with the first word news, im ritika gupta. The pictures are incredibly intense. An explosion at a warehouse in beirut was felt miles away and filled hospitals with casualties. Reports say at least 100 were killed and 4000 injured. Lebanons government says almost 3000 tons of flammable Ammonium Nitrate has been stored in the building since 2014. They are not saying whether the blast was caused by an accident or an attack. The white house and democrats are trying to strike a deal on virus relief legislation by the end of the week, according to treasury secretary steven mnuchin. Mnuchin says the two sides arent close to a deal yet, but they did agree to set a timeline. One of the main sticking points is still the extension of supplemental Unemployment Benefits. It will be the highest level visit to taiwan by a u. S. Cabinet official since 1979, and is seen as a challenge to china. Health and Human Services secretary alex azar will arrive in taipei and the coming days to discuss the Global Response to the coronavirus. Taiwans response to the outbreak has been widely recognized as among the most effective in the world. In the u. K. , a panel of lawmakers has issued a report that is scathing about the way Prime MinisterBoris Johnsons government handled the coronavirus. It urges johnson to be more open with the british people on travel risks, and says the march 13 lifting of all restrictions on people traveling into the u. K. Was in its clickable. Blackstone was inexplicable. Blackstone will buy about 75 of ancestry. Com, the business known for Family History research and dna testing. The deal is valued at 4. 7 billion, including debt. Global news 24 hours a day, on air and at bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. Im ritika gupta. This is bloomberg. Sen. Mcconnell the feeling that seems to have been expressed that we would like to get an outcome, i certainly hope we can. The coronavirus is certainly not over. It is still in a normas problem affecting commute an enormous problem affecting communities all across the country. Jonathan Senate Majority leader mitch mcconnell. Is he leading, or is he following in washington, d. C. . Alongside tom keene and lisa abramowicz, im jonathan ferro. Heres your wednesday morning price action. Equity futures firmer, heading north by 19 points on the s p 500, up 0. 6 . Eurodollar,ket, 1. 1839. The story for most people, gold getting comfortable north of 2000 at 2054. Just explosive, up another 1. 64 . Flipping the real yield and plotting gold against the real yield, they are in lockstep. Theres no other way to put it. Technically, i think that is cta. Jonathan thank you. I studied hard for that. Tom right now, and he is encyclopedic, kevin cirilli, our ,hief washington correspondent the distance between Glenn Thompson and conor lamb. You know these are two congressman from pennsylvania. I am going to guess they are scared stiff. What is Glenn Thompson, the moderate republican, telling his republicans . What is conor lamb, the moderate democrat, telling Speaker Pelosi . Kevin he is saying he is going to be able to deliver to the type of Economic Relief that many Higher Education institutions are needing right now. He is a moderate republican, but also in the backyard of penn state university. Hes one of those lawmakers who is heavily influenced by the battles of Higher Education in rural communities. Tom this is absolutely critical. What is the urgency of Glenn Thompson now to go over to legal mcconnell and say to leader mcconnell and say, grow up and get this done . Kevin it is incredibly urgent because for rankandfile members, for conor lamb specifically, who at one point was hailed as the future of the democratic party, and by all accounts, has a bright political future ahead of him, he has to be able to go back to these battleground districts and say that they are providing Economic Relief not for big businesses, not for wall street, but for the Small Businesses in their backyard. That is why you are seeing a shift in tone coming from leadership, as President Trump has suggested he is going to use executive powder to go executive power to go around the halls of congress. Jonathan heres the line for you. If you look for total consensus among senate republicans, youre not going to find it. Senate majority leader mitch mcconnell. What and who do senator mcconnell turn his back on in the next few days . Kevin at this point, he has dug in on liability protections. I feel like a broken record when i continue to say that, but hes also had to form a coalition. Theres another remark he made yesterday where he noted that by his count, 15 to 20 republicans thenot on board with republican caucus. He cant deliver an entire caucus right now. That is why these negotiations even more so crucial. When 15 to 20 members say they have an issue with this type of stimulus, they are nowhere near the type of unison that typically leader mcconnell wants to see. Jonathan political reporting in the last 24 hours there are three options on the table for him. Action, the payroll tax extending enhanced Unemployment Benefits by using the money that congress has been assigned to spend, but has not used yet. On those issues right now, is this really doable . Kevin yes. There is this great tool on the bloomberg terminal where you can track, based upon public data, where the money from the last stimulus has actually gone throughout the country. The reason i bring this up is because it really illustrates that it is not just cities that have benefited from this economic stimulus. That is why you are hearing this change in tone coming from 1600 pennsylvania avenue. They know that whether it is in a Center County in pennsylvania bronx, you are seeing individuals and constituents take advantage i dont want to say take advantage, but utilize the access to capital that has been made available to them. That is not a republican nor a democratic advantage. That is why the president is trying to specifically say that if these bluecollar workers cant get access to those funds, he is going to have to use executive order while they continue to work out a deal. Lisa the enhanced unemployment benefit that President Trump is throwing his weight behind extending is significant because it flies against the calls of summer lukens that have become fiscal hawks. President trump not known as being a fiscal hawk by any stretch of the administration. Is he lining up more on the democrat side . Maria on this particular kevin on this particular issue, you are correct. There are many republicans, senator ted cruz, for example, who are incredibly uncomfortable with getting on board with this type of spending. In fact, leader mcconnell has said he believes those arguments are justified. But in terms of where the president is going, he has to go on the campaign trail and is fighting a tough reelection battle, and hes got to be able to go to many of these states, to workers who are unable to find work right now were unable economy,ck into the through no fault of their own given the pandemic, and hes got to be able to look in the eye and say vote for me again. In order to do that, this is the type of Economic Relief that is needed. Jonathan some clarity on an important thing, for people outside the United States not following this, how many fiscal hawks are actually standing for election this november . Kevin i would say theres a handful, but i promise you i will get you the exact number. Theres a handful in an incredible tough fight. Senator joni ernst is the one that comes to mind. Shes a republican from iowa, and is very conservative on the economy. Now she is facing a very progressive challenger. So for her, it is interesting because she has got to get the rural iowa vote on board. They are very concerned about government spending. But she also has to get some swing voters and try to push her challenger and portray her challenger is a very farleft democrat socialist. Jonathan great to catch up with you. Kevin cirilli down in washington, d. C. Not my view, of course. Thats just how they put it down in washington, isnt it . Tom it is. It is a real delicate ballet. I thought kevin was incredibly strong there. Your student is that on about the pressures they all face. Again, get out the calendar. That is why you saw the shift yesterday. We are well into august. Jonathan going home for the weekend, facing the embarrassment of telling people you cant make an agreement down in washington. That is the pressure going into this weekend after a payroll that could look a little dicey. From new york this morning, good morning. Equities advanced 0. 6 . 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