The dollar,ack to so it was not clear what the safe haven was today, and then the vix is lower. Lessinly pricing in a lot risk than we were even a few weeks ago. Murky in terms if the market is hoping for some stimulus to come in. Financials aret your outperformance on the day, probably with that very small uptick. Atlor the senior strategist invesco is still with us. I know you said you favored equities over treasuries, but how does highyield and credit look . I was looking at our highyield barclays index. I thought 500 basis points over treasuries looked at one point, and down further, we migrate. How are you viewing credit at this point . I think we are being incentivized on credit, and i expect we will be incentivized to own credit and i expect we will be for a while. These moves that presage a recession, and that is the time when you need to hold true and by Corporate Bonds and investments that always bemoan the low yields never seem to want to do so. You get the policy response in an economic recovery and spreads suspect that is what we are moving towards. Spreads are still elevated compared to where they were for a lot of the last 10 years, so there is still some potential value that exists in those parts of the market, but ultimately, the Federal Reserve is going to be active in the Corporate Bond market. The Federal Reserve will not be raising rates for a very long period of time, and we will be in what looks like a slow recovery. All of that should be a fairly Good Environment for the highyield bond market. It does not mean there will not be defaults in the highyield bond market, but the market prices that in in advance and then waits for the policy isponse and recovery, so believe that investors will want to own highyield bonds in their portfolio, make sure they are rightsizing that portfolio so they are not taking on excessive risk, but using highyield bonds that augment their traditional strategies and to diversify those portfolios. Caroline quite amazing and looking at the statistics for the s p 500, sixday winning streak, the longest we have seen since 2018. As we see the push to equities on the back of these very low yields, negative real yields, do you continue to favor gold at . Ll at the moment quickly record highs at some point put me off. In order to think that gold continues to go higher, you would probably need to consider yhat the economic recoveri gains traction. If it does, and i think it will, you will probably see yields come up some. It does not mean we will not be in a negative rate environment, but the rate of change will improve, so that becomes something of a headwind to gold. Gold has had a very large move. Personally, i would rather own parts of the market where i can generate true income, where i can generate earnings growth. great to have your voice today. Were very thankful you kept your phone line if not some of your internet connections. That doesnt work the closing bell. Miss . Is up next where we will be taking a closer look at todays jobs report. This is bloomberg. Caroline from bloomberg World Headquarters in new york, im caroline hyde. Missed a sudden rally. The s p managed to close in the green with six Straight Days of gains. Laggards are tech on the back of u. S. China tensions. Meanwhile, stimulus seems to have stalled. Treasury secretary mnuchin says he will recommend President Trump move ahead with action to help evictions and possibly restore some employers some unemployment aid as another round of negotiations with democrats ends without progress. New yorks governor says schools can welcome back students if the rate of infection in their communities remains low. What is the cost of keeping safe . Plus, Princeton University goes virtual for the fall semester. Cannot seemongress to agree on a new stimulus bill. If the congress does not act, if theres no deal, and right now it does not look that great, then the president will take his own action. The solution here is to come to a progrowth, common sense, pragmatic compromise. Thus far, that has been elusive, and in that case, the president , who is a great leader and makes good on his promises, will exercise his leadership and executivelevel authority. You can count on that. You can take that to the bank. One thing you did not say was what you guys would do with executive powers on state aid. I have spoken to new york state. They told me if they do not get aid, austerity begins immediately. You have way more experience than i on wall street, going back decades. You know the enteral government is the only one that can act counter cyclically. States do not have that benefit. They do not have that option. You also know if they do not get that aid, austerity starts immediately. What is the federal strategy when statelevel austerity kicks and because we cannot find an agreement on state aid . That theard to say cares bill and other bills in the last 3, 4 months is austerity. We put out what . 3. 5 trillion of fiscal assistance in many forms. The Federal Reserve has put out over 7 trillion through the money supply and lending facilities. This is not austerity not from the federal government. Im not suggesting it will be. Im saying from the states, they will have to cut. You know they will. I will say this because of the pandemic contraction, the income statements of state local government and the federal government have deteriorated, absolutely. What is the solution . Aid. Of the solution is some of the solution is Economic Growth where revenues will start pouring in and the more people go back to work and pay taxes and so do businesses. We have given states through prior deals literally hundreds and hundreds of billions of dollars. I dont want to secondguess. Im not here to negotiate. We are looking at all the asks from our friends across the aisle. I know the president is especially interested in making sufficientare resources to get the kids back to school. If we apply the guidelines of distancing and masking and testing and good hygiene, kids can get back to school. If the schools need more equipment if theres covidrelated expenses, i think theres a chance the president would be happy to pitch in, but the bill that we have been given from the other team goes way, way, way beyond that, and theres a lot of democrat asks that do not make sense, certainly not in the present context. We have to separate that out. It is not so simple as fiscal austerity in the state. Hundreds of billions trillions of dollars have passed from the real twostate. Taylor National EconomicCouncil Director larry kudlow speaking earlier. We have had some Interesting Development on the stimulus front. We are hearing from steve mnuchin, the treasury secretary, saying he will suggest trump thatexecutive action given some of the talks have fallen apart. Trying to figure out exactly what is in that aid, it looks like it could be a payroll tax cut, eviction protection, unemployment benefits, and student loan repayments. Are pushed to see executive orders come through because of the lack of talks going on, and we heard from nancy pelosi, speaker of the house, saying they needed more coming from republicans, a higher amount coming in terms of unemployment benefits. In terms of what is being suggested by democrats, there is still a long way to go. Taylor we will speak with coauthor of the 12 edition of the book the state of working america. As you look at the lack of compromise we see in stimulus, what, in your opinion, will be the most helpful or beneficial to workers at this moment . Its a great question. We heard talk about growth. We have not heard talk about aid to workers and their families. You can do both if you keep that 600 if you reinstate the 600 Dollar Benefit for Unemployment Insurance for those 30 millionplus workers who have lost their jobs in the last few weeks and months, what you will do is support those workers, and that support is going to stimulate the economy, and that will stimulate the economy on the order of 5 million more jobs. Thats jobs across the country that will be created because people have that money in their pockets to not only stay afloat and pay their rent, their mortgage, but put food on the table, provide for their families. When they spend that money, that creates jobs because they are buying goods and services and people need to be employed to provide those goods and services. Caroline the jobs number that we did get, in terms of the improvement we saw, is that something that is sustainable, do you think . Muchthink in terms of how stimulation that 600 will produce is that what youre asking . Caroline in terms of the jobs number we had earlier today and the fact that we are seeing greater improvement than anticipated. Is stimulus needed to see . Ontinuation of that growth i think it was not as high as we thought. It was a decent number 1. 8 million. Some people were predicting much closer to zero, so promising in that way, but certainly disappointing in the numbers we twoseen the previous months, and i think that slowdown is because of the resurgence in coronavirus and reshuttering of parts of the country and we may see that continuing into august depending on what Health Experts are telling us and depending how this virus spreads. Thats why we need to provide support for workers who just need to stay home because the economy is not ready to fully open at this time. Taylor i understand needing to help the unemployed at this moment because through no fault of their own, they do not have jobs they can go back to at this moment, but the other side of the argument is we are running massive fiscal deficits and our debt load is becoming too much of a burden, at least according to fitch, one week ago downloading the outlook of the aaa rating of u. S. Debt, purely on the fact that debt to gdp does not look sustainable. How are you thinking about balancing the two . What im concerned about is the federal government can run some deficits, but its really the state and local governments that cannot. That thosehe people governments need massive Fiscal Relief because they cannot do the same borrowing the federal government can, and that can help substantially not only with the growth that you want to see, as we heard already, but it helps with jobs and being able to provide the Public Education jobs needed to have the Education System up and running. We need that Fiscal Relief. If it does not come, there will be budget cuts, and that severe austerity will put a chokehold on the austerity that severe austerity will put a chokehold on the economy. Caroline im also interested in the work you have done in terms of the increasing on equality increasing inequality we see amplified by what is happening with covid. The numbers, even though we have seen improvement, it still highlights far too many people are unemployed, and far too many black people versus white people are unemployed. It is so stark, theres now a 5 difference. , and fivet 9 Percentage Points higher, the widest gap we have seen since five years ago. How can this be tackled, from a fiscal perspective, government perspective, or even from a Federal Reserve target . You are right the Unemployment Rate has been versusfor black workers white workers throughout history. We are seeing the recovery has been reaching more white workers than black workers, even as black workers some much worse outcomes at the depths of the pandemicdriven recession and black workers are much less able to weather the storm because of all the historical discrimination they have faced and the wealth gap. They dont have the same resources that white workers and their families have had, so we need to tackle this head on in all of the areas in terms of wage gaps, income gaps, wealth as black persist, even workers have more levels of education. It is persistent across, and we need to close those gaps. We need to target the black Unemployment Rate to make sure that is as low as possible. Taylor how are you thinking about that Going Forward . If we dont get 600 a week lets say 400 a week or 300 or 200 or whatever the final number will be what does your analysis show you about any harm that could be done if it goes from 600 to 400, for example . If we cut the benefits more, instead of killing 5 million jobs, you are killing 2. 4 million jobs, so you are putting a chokehold on how much that job creation can happen in the next year if we dont put more money into peoples pockets. Obviously, it is hugely important for those families to have that money right now. Unfortunately, we will be seeing if actions. People are not able to pay their rent, their mortgages right now. We never want people on the streets, but we particularly do not want people on the streets during a pandemic. This is devastating, and it is avoidable. Carolyn thank you for spending your time today. Coming up, we are talking turkey. The turkish government stepped in to end what has been a turbulent week for the currency, but nevertheless, the lira falls further. We will talk about that weakness next. Caroline earlier today, the turkish lira rebounded briefly after the government tightened monetary policy. Bloomberg has learned regulators are preparing to roll back rules that compelled lenders to boost loans. Banks will be able to raise Interest Rates on credit and deposits. Intelligenceberg chief emerging Market Strategist in us now. Talk about how we got here. A record low for the lira versus the dollar, and it remains there now. Talk about brief. We have seen a 6 roundtrip move. We touched a record low before rallying this morning. Roundtrip move. Thats unbelievable. Its now down 18. 5 year to date. We are seeing a little bit of a shift on the part of federal officials in turkey. Prior to today, they have been reluctant to hike rates, but by moving local lenders to borrow from the overnight rate, which iscurrently 9. 75 , that equivalent to a rate hike. While it is not enough to restore confidence in the liver, it is certainly a step in the right direction. Taylor walk me through what weve seen in the lira. When you had massive dollar youngth in march and april, weakness in these currencies, but now that we see dollar weakness, are em movement toeeing the upside . Know, they are not. We have to look back to august 2008 when he saw the lira go through this crisis once before. You see these liquid off get hitk em currencies worse because tighter value at risk limits from big Institutional Investors physically take money away from those currencies when they are caught in positions that are running out of favor. It looks like the rand is going to get hit, perhaps the brazilian real as well, but really, what are we talking about . Facing turkey is a liability mismatch issue amongst. Ocal banks 75 billion the real risk is placed on turkeys external credit is. Thats creditors. A lot of that is held at the banks, and which banks have the largest claims on turkish financials . Spanish banks, italian banks, french banks, and they may be most at risk as well, but i think em currencies will be far more concerned with u. S. China trade tensions and the resurgence in covid far more than they are with turkey at current levels. Carolyn interesting. To turkey in and of itself, they keep driving Foreign Investors further and further away with some of the more controversial tactics they seem to take. Thats exactly right. Its a major liquidity issue. 60 billion is what the turkish government has spent to support the currency this year. Are 50 billion, but they have shortterm swats of local lenders that are far greater than that, meaning that reserves are now negative. Hey do not have the ammunition they are probably going to have to turn to bilateral policies. Qatar pledge 15 million in a swapents and gave them line to help them emerge from the crisis back then. I dont see anyone coming to the table now, but hopefully they can come to terms with some lenders and find some assistance somewhere because i just dont think they have enough. Mmunition to fight this tide caroline always great to get your expertise when it comes to each of these individual companies. Have a great weekend. Quick check on the latest headlines. Pandemic has her vehicles, alectric south Korean Company expects its battery business to reach a record thanks in part to deals with tesla. Is also using virus recovery funds to help boost sales of electric vehicles. Meanwhile, switzerland has struck a deal with maternal to supply the country 4. 5 million of a covid19 vaccine, one deals with asuch government and madonna switzerland has struck a deal with moderna. President trump band u. S. Companies from doing business with tiktok and we chat wechat. Caroline President Trump signing a ban of executive orders to band tiktok and tencents wechat beginning 10 days from now. The move marks a significant excavation escalation in the chinasttempt to curb activities. You were made for this new cycle. Talk to us about the legality of this and if it would work. We see it done with huawei. It has been almost able to be pushed to other countries as well, but will any other countries toe the party line . I think it is a big question if these executive orders are actually going to reach going to affect, theres this there will be a huge amount of lobbying because it affects u. S. Businesses who operate app stores like apple and google, and people are going to push back. We dont even know if it will happen, but earlier this week, ansaw pompeo push International Initiative to try to get a bunch of other countries on board with a basically no China Internet strategy that they call clean. As you push countries a little harder with things like lets fan chat lets wechat effectively cutting them off from their partners in china, its less likely the u. S. Gets pickup. Taylor tiktok earlier this year was being d