People saying we are going to get this rotation out of growth, into value. That rotation seems to be overdone. I wonder if you are still going to get people trying to push that narrative. Jonathan yields higher off the back of the ppi data yesterday. Friday. Y, retail lisa we are expecting a little bit of an increase, kind of like what we saw yesterday. It is going to be interesting to see whether weve got a further selloff in bonds. We will get another record sale of u. S. Treasuries on the long end, selling 10 year notes. Yesterday we saw that three year auction come in very strong. Interesting to see whether that happens again. Today we are going to be hearing from the Vice President afterate Kamala Harris joe biden selected her as his running mate. They will be speaking in delaware later today. Jonathan lets start with the fx market. Eurodollar starting to push just a little bit higher, up 0. 3 . In the equity market this morning, equity futures up by around 25 points, up around 0. 75 . There is the move in the bond market for you. Treasury yields higher to 0. 67 . We did this in early june, where we saw the 10 year get to about 70 basis points. We are seeing it in germany, too. Lisa is it an inflation bet . Is it a bet that perhaps the fed wont buy up as much as possible . I just dont see the narrative behind this driving substantially higher. Jonathan lets get to our first guest of the morning, jared oodard, bank of america head of the Research Investment committee. Draw the distinction for us. Jared we keep it simple here. I think any move towards value, any rotation to cyclical sectors is going to be a tactical shortterm flash in the pan until some changes in the economy that can provide meaningful growth higher. Until then, i think these are noisy moves higher that a lot of investors can endure. Lisa because yields are higher, that should be good for the cyclicals. That should be good for the banks. Why is that not another sign about performance, given that there may not be any reason behind this rally . Jared theres a lot of crosscurrents in the bond market right now. Theres a lot of confusion about what it will be like in the future. Most importantly, the sense that if yields really do rise in a meaningful way, the fed will come in with yield curve control and cap any big move anyway. So the longterm benefits, the correlation you might expect between yields and banks and other cyclical sectors, i think is not going to be what it once was, again, until the economy is structured in a very different way. Jonathan you mentioned financials. We saw an yesterdays session, financials can outperform on the way down. Up . They perform seed if you start to deposit growth slow, loan growth pickup may be in the later part of this quarter, i think there are some moves that can happen that are worth taking a peek at. But for a medium or longerterm oriented investor, we are much more concerned that secular stagnation plus epic stimulus equals a really epic bubble in Growth Stocks, tech and health care. It accounts now for more than 54 of the market cap of the s p 500, the highest ever. Incidentally, if you sustain the current pace we have seen this year, tech and health care would account for the entirety of the market by 2024. Jonathan lets have more faith in a sustainable rotation if we had a deal down in d. C. We dont. Jared investors are watching this really closely. They understand that more stimulus is necessary. Weeknderstand that 200 a Unemployment Insurance is a disaster. 400 might keep us on the footing we are at today. But right now, weve got none of it. I think theres a real sense of watching and waiting. If we go into another week of no progress on talks, i think youll see the markets start to care a little bit more. Lisa how does that translate . How big of a selloff could we see if there is no deal . 2008, when the house voted down tarp, the s p fell about 23 in sessions after that. Not saying we get the same move this year, but i think theres a sense where if it really does look like ellis he is going to. Ail, the market and care a place where the market has to impose a little bit of discipline on washington. We told investors this week we think it is a q3 hedging risk or buying opportunity, but we wouldnt be surprised if we get a lot more volatility before there is some peace in washington. Lisa what jared just said come of the idea that perhaps the market will impose some discipline on washington, goes to something you said last week with larry kudlow. You said, isnt it problematic that you have sony people losing their jobs at a time when you have markets rallying . Down in washington, they dont care about the jobless rate is much as they do in terms of a signal from equities. You just have to wonder, what does that say about the deliberation process down and wash . Jonathan i think it is embarrassing. If this market was to any percent lower, if the equity market was down hard like it was in march, i think we would see some followup in washington, and we dont. It makes me wonder, for you, what is the cutoff point at inch you look at things washington and say, it is not happening . Jared it is a tough call because our conversations is that everyone involved understands the need for more stimulus, for more aid. They are just haggling about who gets what and who gets credit for pushing things through. A little bit of real stress can overcome some of those challenges, so we do expect, whether it is a week from now or two or three weeks, at some point we expect there will be more stimulus. I guess it is a question of the past to get there of the path to get there. If there was a calculation that may be some more economic stress changes votes in november in a way that they think is favorable, that is something to really worry about. Have a senseto that people are thinking in those terms, then it is a very , some of situation that you raise cash on the back of. Jonathan we need to talk about the 6040 split, something you at bank of america have been talking about for a while. Plenty more people talking about this now, what to do with the 40 portion. The correlation between treasuries and growth, and more broadly, the equity market as well. Can you speak to the problems there . Jared we wrote this week that the secular stagnation, this economic malaise has really started to blur the lines between Asset Classes yet in some sense, a longterm treasury bond is not that different from a tech stock that pays you a high dividend. They both start to look really unattractive we see either stagflationary populism or a world in which industrial policy and other investments to boost productivity really change the game. That is why we suggest investors think of the kinds of risks they want to take. That means you can own gold. Riskould also own credit in a way that has less to do fixedts design is a income instrument, and more with what we see is potential for fundamentals. In any world, those conventional methodologies start to make a little bit less sense. Investors need to be a little more flexible in their thinking. Lisa gold. A lot of people saying it could be a hedge against equities, and yet they are moving in tandem. Can you reconcile that . Inflationve got 1. 6 . Its a modest recovery, not a huge breakout. Got the fed on hold. Yields 0. 6 or so. The real yield is kind of a signal from the bond market and from gold moving in tandem that you could buy basically anything but nominal bonds, and you would be better off. In that sense, gold is a kind of get out of here trade from the perspective of the bond markets. You season rotating not just gold, but other secular things, cryptocurrencies, all kinds of assets that otherwise wouldnt make sense if the cost of carry wasnt really meaningful. If growth rates are able to normalize, you will see investors continue allocating two things that maybe they would not have done in the past. Jonathan great to catch up. Our best to the team. Coming up on the program, we will talk more about the fixed income market with rob waldner of invesco. Just at the epicenter of some of the shifts we have seen cross asset worldwide in the last couple of days. Asa we are definitely seeing bleed up in the benchmark 10 year real yield. Leading to questions, is the ,elloff in the treasury market does it have legs . Jonathan tom on vacation. Those Vacation Days are racking up for tom keene. On the bond market, treasury yields higher by three basis points on the 10 year to 0. 67 . In foreign exchange, the euro 1. 1770, up 0. 25 . 0. 7 e s p, we are positive. Good morning. Heard on bloomberg radio, seen on bloomberg tv, this is bloomberg surveillance. Ritika with the first word news, im ritika gupta. China wants to discuss tiktok and we chat at upcoming trade talks with the u. S. The chinese will bring up President Trumps perspective trumps president perspective bans. Joe biden is counting on, harris on Kamala Harris ties to the progressive community. He made history by selecting the california senator as a running mate, the first black woman and the first asianamerican on a major party ticket. Tycoon jimg, media eli has been released from jail, the most prominent figure detained yet under hong kongs sweeping National Security law. Dailyspaper the apple is critical to chinas communist party. The british economy suffered more than any major european nation during the coronavirus lockdown. That followed a 2. 2 drop in the first quarter, and it officially pushed the u. K. Into its first recession since 2009. Airbnb going public. Bloomberg has learned the home sharing startup plans to file paperwork for a stock listing in the next few weeks. Stocks could start trading as soon as the fourth quarter. Airbnbs business has rebounded after being hammered by the coronavirus lockdown. Global news 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. Im ritika gupta. This is bloomberg. Pres. Trump one of the reasons it surprised me, she was probably nastier than even pocahontas to joe biden. She was very disrespectful to joe biden. It is hard to pick somebody that is that disrespectful. Jonathan the president of the United States weighing in as the former vp joe biden completes in vp pick in, harris Kamala Harris. By 0. 75 . S up the euro with a lift. It is just the treasury market this week. We have tenure supply today and 30 s tomorrow and 30s tomorrow. Lisa we are getting the record low yields, so it doesnt hamper money. Lity to borrow i do wonder if it factors into the selloff we are seeing in treasuries, exceeding any increase in expectations for inflation. Jonathan joining us now from washington, d. C. , bloombergs kevin cirilli, our chief washington correspondent. In many ways it is historic. It is also safe. Can you speak to the former vps vp pick . Kevin on a range of different policy issues, she is worlds apart from Vice President mike pence. When they get up on that debate stage in the next couple of weeks, it will be remarkable to see the contrast. On foreign policy, she has advocated to rejoin the iran Nuclear Disarmament deal. On energy policy, she has advocated for the framework of the green new deal, something this administration has said is a nonstarter. On domestic issues, pertaining to fiscal stimulus, she has advocated that certain families that are less than 140,000 a have 2000 per month during the remainder of the pandemic. That is something that we are still at an impasse here in washington, d. C. On. But whether it is social issues or your point about the Glass Ceiling she could very much shatter, senator Kamala Harris, the junior democratic senator from california, is really poised to electrify the base of the Democratic Party, but she does it at a time in which there are challenges on the campaign trail because of the pandemic. Jonathan we know what the playbook was for the administration. It was to basically paint this pick as a trojan horse for the radical left. I am not sure how effective that is going to be with senator harris on the ticket. Kevin well, she has really crafted her political message as a bridge of sorts between the far left of the party, as well as the centrist wing of the Democratic Party. She is a generational bridge as well. She is now at the forefront of the next era of Democratic Party leaders, regardless of the outcome on november 3. But to your point precisely about that type of attack, she is also someone who, during the last president ial primary, the crowded democratic prisons will primary, really took it head on on the issue of health care. She at one point had been a cosponsor for Bernie Sanders m edicare for all plan, and then put out her own plan that allowed for some type of private option to be included. I think on the issue of the middle of the road, as it relates to Something Like china, she has sponsored legislation that would make it easier for the United States to go after officials in china who steal u. S. Intellectual property. I mention that because you are absolutely correct, she has worked with republicans on certain issues like china. She worked with senator mike lee on immigration on a wonkier issue. She does have a somewhat bipartisan streak. Lisa the fact that this is a generational shift, for a person who is 55 years old, really indicates something about the leadership in the United States congress. I will say, just going forward, how much will she actually catered to the undecided votes, given the fact that she also is going to, as you say, energize the base . Kevin we talked about the policy. Now lets talk about the politics. When i was talking with strategists throughout the last night since this has happened, how will senator harris play in wisconsin, michigan, pennsylvania . How will she play in those battleground areas . We dont know. This is someone who came to washington with that political it factor. Whether it was then senator barack obama or senator marco rubio, certain senators arrive in the Upper Chamber with that political it factor, and she always had that about the future. Of her political ambitions. She loves to campaign the future of her political ambitions. She loves to campaign. Now we are in a situation where there is virtual conventions, theres no pomp and circumstance. We are anticipating a joint appearance sometime later today or over the next couple of days, but there wont be the confetti. There wont be any of that. Pomp and circumstance. So how she is able. That through the videoconferencing will be interesting to see because, quite frankly, when you talk to her team, she wants to get out there and do the selfreliance. But right now the selfie lines. But right now, this is not the option. Jonathan thats what the senator brings to the table, the energy. It is what the former vp does not have compared to what hes up against. Kevin i look at this in terms of today until november 3. Youve got the debates. You really could not have more of a contrast on the policy, on the politics, and quite frankly, the personality between Vice President mike pence and senator harris. Last night, i we watched the debate i rewatched the debate between tim kaine and mike pence. Tim kaine is a very different debater than senator harris. Jonathan i mean it politely, tim who . Thats how inspiring that pick was. Kevin then you rewatch the way senator harris and the democratic debate took on biden, took on tulsi gabbard, it is going to be really interesting to see. And joe biden knows how important this pick is. If you want a safe pick, she does have some unpredicted billet he and her record and her campaign style, good or bad. And just a final point i would note on this, remember, joe biden debated sarah palin, so he knows exactly the type of attacks that the republicans are already set to be trying to drum up, when you got the president s Reelection Campaign already debuting that nickname. Lisa did kevin just conflict sarah palin with mike pence . Is this a sort of comparison . Are they analogous . Kevin no, i want to be clear. What i am saying is that joe biden knows how important Vice President ial debates are because was onhistory, when he Barack Obamas ticket, so theres that. Also, Vice President pence has always used a more steady, stoic debating style in this entire st term, and a rather first term, in a rather unpredictable trump first term. Jonathan why are you coming for kevin this morning . [laughter] lisa tom is a tear. Someones got to do it tom isnt here. Someones got to do it. Jonathan this is bloomberg. Businesses are starting to bounce back. But what if you could do better than that . Like adapt. Discover. Deliver. In new ways. To new customers. What if you could come back stronger . Faster. Better. At comcast business, we want to help you not just bounce back. But bounce forward. Thats why were helping you stay ahead and adapt with a network you can count on, 24 7 support and Flexible Solutions that work wherever you are. Call or go online today. Jonathan from new york city, this is bloomberg surveillance. We are live on bloomberg tv and radio. Tom keene is back with us in a few days. I understand he is moving. Hes in the middle of a move right now. Its not just a vacation. I should characterize it a little more specifically. Hes moving up a single floor. Lisa evidently that is incredibly difficult. Actually, i can testify that it is. Also, he might be selling some of that jewelry he bought in a rush. Jonathan people think im kidding. Hes going to the floor above him. He can tell you all about it on monday. Lets get to the price action this wednesday. We bounce back on the equity market, up 25 on the s p. Euro, 1. 1764. In the bond market, this is where the action has been. Yields up by two or three basis points this morning to 0. 67 . Ton of supply coming through the week. Yesterday, tends today yesterday, 10s today, 30s tomorrow. Lisa a lot of people saying the fed is going to come in and buy if we see any increase on the long end. Theres also a question of how much people are pushing back against negative real y