Have to believe in some ways it is being managed. August, but inng no way is the dollar reverting. It gets overplayed by the media. 1. 19. Ere it is, now 1. 1839. Francine the fact that you call this a boring august, i dont know what an exciting august looks like for you. We have turkey, the markets, trade. Your bar for an exciting august is high. Always exciting news. Here is with. Haska Kamala Harris accepted the nomination to run for Vice President with joe budden. Harris told the Party Convention that President Trumps failure of leadership has cost lives and livelihoods. Kamala lets fight with conviction. Lets fight with hope. Lets fight with confidence in ourselves and a commitment to each other. To the america we know is possible. The america we love. The political fight over the post office make clear the way for congress to resume talks on a virus relief bill. Democratic and Republican Leaders are hinting at potential compromises. The white house says it is open to democrats demand to increase funding for the postal service. President trump will call on the United Nations secretary allrity council to restore Nuclear Related sanctions on iran, and attempt to kill off the 2015 Nuclear Agreement and force iran back to the negotiating table. Key u. S. Allies have said they will not go along with any plan to reimpose sanctions. In russia, Opposition Leader Alexander Nowotny Alexei Navalny has been hospitalized with a suspected poors and think. It is suspected that he is in grave condition. Aides believe something was put in his tea while he was meeting activists in siberia. 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. Tom thanks so much. There are headlines that come across the bloomberg that confirm rather than lead. This would be one of them. We just learned that the 90day, the threemonth euro bore, lets call it the libor equivalent because we are just friends for breakfast fell to a record low. 251. 91. Future still negative, 14, dow futures at 103. The vix, from a 21 handle out to 24. What is really telling here is the third number on your screen. For those of you on radio, this is the 10year tips, and it is persistently it has persistently stayed between 1. 00, now 1. 0 one. Francine, for that to break down lower would be a huge deal. The other thing we saw an hour ago is a lower swiss franc come off weak gold as well. Francine it reminds me of something that i wrote that i read last friday from barclays on euro bor. The barclays report was saying a mismatch in european unsecured money markets is setting the stage for further declines in Bank Borrowing rates. It feels like something that is , or quite typical of europe at least symptomatic of europe, and they were predicting that eurobor would drift to. It is a mean overall im looking at stocks. They are dropping in much of the world, including here in europe, down 1. 1 after the fed signaled continued concern over the pandemic. Treasuries advancing. I wanted to show you quickly what the American Crude Oil was doing, tom, because of opec. 42. 59. Joining us to talk about this is Peter Schaffrik. First of all, peter, euro bor declining. What does it actually tell us about what is going on in europe . Peter co. It is not a oneoff, it is a trend. You have to keep in mind the ecb in particular is the prime creator provider of liquidity these days, and particularly they have been providing ample liquidity for the Financial System some time ago, and that money needs to go somewhere. When you look on top of that money creation, through the paps scheme incular, particular, that money needs to go somewhere. In the one of the ways money market, you see it particular through compression. You see that in sterling as well, to some degree in dollars, but in euro, the massive Liquidity Provision is the most pronounced. Can ite how much more actually fall . It is already at a record low of 0491. Of if it goes below 05, is it a significant shift . Peter in theory, everything can happen. You should provide a more roundabout where the market implies Interest Rates to go Going Forward, and that is around the 50. If you look at where it is Going Forward. Again, sometimes these things can exaggerate, but i would expect the implied money market for future Interest Rates to be the flaw for this. Tom good morning. I want to talk about aggregate demand. What i see on my screen today, and all of us are jump started by the fed meeting yesterday. I got a 30year u. S. Bond and a big four basis points. The 10 year yields tittle yield still pretty much in range. You at rbc see sort of a settling here that demand is just simply not going to be there at the end of the year . Iter i am not convinced that would underwrite it. Obviously we cannot see a significant rebound in the economy and a significant reshaping in fed policy Going Forward. That is a little bit what the market has been reading into the fed minutes. When you look at the bigger picture, most of the central bank, including the fed, they would hold Interest Rates at current levels for a very long period of time. Whether the fed gives up clear guidance in this meeting or the next does not make any difference. Also, we will keep buying to a meaningful degree, so i find it very difficult, unless the economy makes a miraculous recovery, i find it difficult to see, not being demand in the u. S. Where there is sort of a spread. Tom we have to make some news this morning. It is a slow news day. Do you agree with j. P. Morgan that the glide path off a weak Global Economy is for the u. S. 10 year yield to migrate toward 0 . Peter i think bypass is a nice word, so i would underwrite that. Tom im not used to short answers like that, folks. Hes not doing august tv. You have to give me longer answers, peter. Im still waking up. Folks, really important, because it is thursday and we have jobless claims picking up. I look at the summation here of the data and some of the charts, frankly, and they are really elegant and reaffirming a slower global gdp trend. Yet, as francine mentioned yesterday, iron ore to the moon. Which is it . Ther let me give you longer answer. When you look at first of all, i think particularly with the resurgence or likely resurgence of virus concerns going into the winter, global gdp is cyclically as well as structurally coming down. That is in my mind. When you look at the pricing of the treasury market in particular, one of the things you are currently seeing, and to some degree, explaining as a commodity trend you mentioned ons earlier, real yields the other hand, what the fed wants is the expectations for inflation implied at the breakeven is grinding again. You see that particularly in the u. S. And to some degree, that is also applied implied in the commodity market. So if divergence is there, the fed is very happy with that development. The real risk and i think that is also going back to your earlier question, is the inflation trend we are starting to see coming into the medium term or the near term. If it is not coming in the near term, there is that putback potential here as well. I hope thats a long enough answer for you. Tom that was good enough. I was able to get a cup of coffee there. Francine tom managed to have a whole espresso during that, peter. What would it take for that divergence to loan longer continue . Peter one of the big things would be if to no longer continue . Peter one of the big things would be if we had a significant setback and the economy because we would have inflation implications breakeven. That is a plausible scenario in the near term. On the other hand, if i made get back to europe a little bit,ost of europe and the economy we would have to see them extending furlough schemes, extending fiscal responses. One of the counters would be, if you have a renewed price down with pressure on the economy, we would probably get a stronger physical response from premuch everywhere. Tom Peter Schaffrik with us. We are thrilled that he continues with us. I want to come back and talk about some of these glide paths we are seeing. Where did we get the phrase glide paths . It is pretty common in economics, but i want to give peter orszag come a wonderful economist, credit for using the word glide paths. We are thrilled that dr. Dean will join us here. It will be really interesting how howard dean looks at the old guard and the new guard of the Democratic Party. Futures 13. Stay with us. This is bloomberg. Tom bloomberg surveillance. I thought it was going to be a boring day. It is not, decidedly, off the fed meeting yesterday. Currency market a tumble, a jumble may be would be a better phrase. The bond market, 30year bond, a big 30 basis points. Four basis points. We are thrilled to have Peter Schaffrik with us of rbc capital markets. Off the tone of the fed yesterday, and their struggle, peter traffic Peter Schaffrik, to reflate. John hermon does wonderful granule granular work. Has itvious decade, he under 2 , 1. 48 real gdp as a potential gdp. That declines by 24 to a potential gdp in this decade. That is not a good thing. Are we ready for that . Peter i mean, but one of the things that is very clear, even before the coronavirus crisis, potential gdp was declining demographics and all the rest of it. On top of that now, is this huge crisis that was flushing out some industries that for a long period of time are not going to be back to their former strength. So from that perspective, that potential gdp trend lower for me makes a lot of sense. If i may add in the you near in the near term, perhaps we are looking at markets on a daily basis, one of the key things is, how much can you try to mitigate that through additional policies not only on a structure but also cyclical trend. That is also what i mentioned earlier. The second we see any weakness, we see somebody jumping on the fiscal pump. Americas, and i would say two global economies. I happened to pick nordstrom stores, which is a big American Department store. Those are lines going in a diverse and direction in a different direction. Is one of these lines that we grossly underestimate the technology disinflation that we are living . Peter yes, to some degree, but on top of that, i think there is also the disinflationary trend in the near term that comes from the sheer demanded disruption that is out there. If i may, going back to the question that we had before the break, in my mind, the big question is whether we can use the technology on the one hand and the changing structure of our economies, the Global Economy as well as the domestic economy, to reflate the economy Going Forward mediumterm. That is the crucial question. The market is pricing that way. Look at the shape of the breakeven. The market is pricing that to some degree. Francine just to be clear, what is your expectation for inflation . Year, twothe next years, i dont really see any big chance of significant inflation anywhere in the developed world. It is very unlikely to happen. Not in our forecast, not in the Central Banks forecast. It is nowhere to be seen. That is the near term. When you look out two years, five years, it allows that because it depends on quite a few thing. What is the ecb going to do with the inflation target . How tolerant are they going to be . We expect they would be more tolerant, but we dont know that yet. How strong his fiscal policy going to be over 83, 4, five year horizon . I think it will be very strong, but the jury is still out there. It is too early to make that call, but i think the signs are that the nearterm is going to be very different from the mediumterm come if that makes any sense. Francine it does make sense. Do you think that a lot of the fiscal support is endless, or will governments start worrying about debt . Peter it is close to endless for the time being, i would say. Debt levels are very high anyway, and we just add to that and the Central Banks are scooping up. It is what i call through at least a corporation if not a semifusion of fiscal and monetary policy, and that is going to be here for a long period of time. Unless we run into Serious Problems in placing the debt, the remaining debt on the private markets, which i dont think we will in the western economies. I think this will go on for a very long period of time. , andthere is a trend here does that trend lead to negative Interest Rates in the United Kingdom . Peter we have a call out there that we think the bank of england will cut Interest Rates into negative territory at one point. In my mind, that stems on the one hand from a very bad handing of the virus situation from a relatively poor growing economy to begin with, and on top of that, with the whole brexit thing that will become a big theme going into the end of the year. Yes, we do think that is quite a likely outcome, and the question is about timing in our minds. Tom this has been wonderful, Peter Schaffrik with rbc capital markets. A wonderful discussion of some of the trends there, and we see the rate structure down as well today. The 10 year yield in the United States, up three basis points,. 6541 . We switch and be go equities. We can do that with a colleague of Peter Schaffrik. In the 8 00 hour on the equity markets, Lori Calvin Sena lori calvasina. Stay with us. This is bloomberg. Ritika bloomberg surveillance bloomberg surveillance this is. This is bloomberg surveillance. Ofcould lead to hundreds millions of dollars in damages, corn to a fed fort fed court filing. Facial scan images of children, sending comfort confidential information about adults to china. Tiktoks streaming app is under threat of being shut down in the u. S. Would you suggest the growth of its Data Center Business will slow. Chipmaker is forecasting sales in the low to midsingle digit range in the quarter. That is down from a 50 port surge. From a 54 President Trump has continued his attack on goodyear. He says he may swap out the goodyear tires on the president ial limousine. The president called for a boycott of the company after allegedly banning employees from wearing his trademark mega hats at work. Goodyear asked that employees refrain from supporting candidates or polluted from that supportsn candidates. Tom equities, bonds, currencies, commodities there are some real nuances in the market. Nicely after the sixday run of higher yields, the 10euro tip come of the real yield statistic, 1. 0131. That shows the pressures that are out there, the vix, 24. 06. Francine . Are dropping in much of the world. In europe, a lot of the focus is on what the fed did. We will talk about it a lot more. Treasuries advancing. Im also looking at euro. There is a bit of fluctuation on euro before the release of the european Central Banks meetings, the minutes, and prognosis for the economic recovery. Look out for any kind of fluctuation in euro. Coming up next, amy pope, chatham house. We talk dnc. This is bloomberg. Hefor close to four years, has shown no interest in putting in the work. No interest in finding common ground. No interest in using the awesome power of his office to help anyone but himself and his friends. Treating then presidency as anything but one more reality show he can use to get the attention he craves. Tom whatever your politics, we that is extraordinary to hear any former president to speak of any president like that. Maybe adams and jefferson and the battles they had in 1802, just extraordinary. To give us perspective, amy point amy pope joins us. You with us have today. President obama and i remember this in his first lincolntion echoed in talking about a better america. Somewhere out there, republicans and democrats are looking for a better silent majority. Where is it . Amy good question. Right now, partisan folks are controlling a lot of the narrative. What i see at the convention is they are trying to bring together a range of points of view, different people from different backgrounds, and demonstrate there is consensus across the country around core principles. Tom this is important. After the regime of clinton and obama, we forget the Democratic Party is always fractious. That is the nature of the beast. They are speaking to their partisan group now, but do you know if they are speaking to the silent majority . Amy i think they are. Whatare trying to show they care most about and what they are going to put their political clout on, Kitchen Table issues. Health care, education, real concerns about covid. These are things that impact every person across the country, particularly those who are not terribly political. We are not seeing a politicized message as much as one that is trying to get to the heart of issues that impact americans on a daily basis. Francine is that enough to get people to vote . People will not vote this time . Why formerk part of Vice President joe biden chose Kamala Harris is he is trying to energize part of the constituency he is concerned wont vote. Whether it is young people or people of color or people who are disaffected by politics as , signing choosing her to them that it is worth noting. And when it comes to health care and Covid Response he is trying to get middle america. People whose lives have been disrupted in fundamental ways. People whose bank account has been hit hard, trying to persuade them they need to get out and vote. That was president obamas message last night, there are fundamental issues on the table and people need to take them seriously. But i hate to be cynical, does policy elect president s . Does policy really matter at the end of the day . Amy the evidence suggests it does not. People want to feel comfortable. They want to feel that the person in charge has a way forward. In some ways we have seen this with the biotin campaign the biden campaign. Stressed the Current Administration has failed on fundamental issues. They are hoping people will vote because they are disturbed about the future of the country. Same time, there are folks they need to get on board. That is why you see diversity within the points of view of the convention itself. For some folks policy matters, i do not think that is whats going to get the majority of americans to the polls. Francine why do people not vote . Is it because they find it hard, or are they not general energized . Will the postal village make a difference . Amy i hope. I think people dont vote for a number of reasons. One is apathy. Two is they do not see how it is going to impact their bottom line. They become cynical or disillusioned about the ability of government to change their daytoday life. They just dont think it is worth the time. There is a host of other issues and i think the message of the it really has been can come down to a handful of votes in the end. That could make the difference in who is elected. Ising to persuade people it in their own selfinterest to get out there, it is easier than ever. If they dont vote, some of the things they take for granted they might not find the next day. Ncine is there anything President Trump has been unpredictable at times. Is there anything the Trump Administration can do to get it on their side . There have been a number of missed opportunities. Ways, is an some opportunity for a president to persuade voters they are better off with him or her in charge. Is a tough crisis for whomever is at the top. Is inevitable there would have been failures and challenges along the way. This president has compounded it. There is an opportunity for him to deliver. If they could get out meaningful testing, if there was an upswing in the economy, all of that would be persuasive to people. People are going to be weighing if they want to switch horses in the middle of the race. Evidence suggests they are seriously considering it. Pull itt trump could out and persuade people he has got this under control. Tom to advance forward, after conventions,ginal we are going to see the president s speech at the white house, what should we look for after that . Amy i hate to say the polls. The polls are not a great learned ins we have 2016. I am looking at will this president put voting at risk . The suggestion he is trying to undermine peoples ability to vote, undermining the post office, those kinds of things could create a very fractious november beyond what it is already going to be. I am curious to see how that plays out. Ultimately it is in the best interests of both parties to make sure their constituents are aware of ways to vote and to have trust in the voting procedures. Tom amy pope from chatham house. City, here is ritika gupta. Ritika Kamala Harris reintroduced to the nation last night. The senator embraced her place in history as the first black and Indian American woman on the major president ial ticket. In her speech, harris spoke of her upbringing and what she learned from her mother. I accept your nomination for Vice President of the United States of america. So committed to the values she taught me. The word that teaches me to walk by faith, not by fight. Stayed harris largely clear of attacks on President Trump, though she did say the incompetent makes us afraid. President trump refused to set aside the far right conspiracy n. Vement he went on qano then believers believe world is run by pedophiles. Showdown over obamacare. Will hear arguments over the constitutionality of the Affordable Care act. Democrats want to make health care a central issue in the campaign. Another sign north koreas economy has been battered by sanctions. Kim jongun acknowledged the countrys Development Goals have been seriously delayed. He told a working party of the central committees that north korea faces inevitable challenges. Global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. You. Ine thank up next, we talk russia and turkey. That conversation is up next. This is bloomberg. This is bloomberg surveillance. From the emerging markets, the Turkish Central Bank is announcing its Rate Decision today. Spokenonomists we have to have said a hike is needed. To talk about this and russia is timothy ash, Bloomberg Analyst strategist. Great to speak to you, especially on a day like today. What happens to turkish lira if central bank stays on hold . Tim i think it will weaken. There are few expectations may they do the right thing. Maybe they do hike the base rate from age 25. A week or so ago, they decided they were giving up on the lira and going back to traditional tightening. Basically, the market wants convincing rate hike. A hike in the base rate. That is important because we all know the central bank of turkey needs permission from erdogan to hike the rate. If they hike the rate, even erdogan has said it can hike, or they are independent and i think that is an important signal. A key turning point in turkey. Francine what are the chances of the central Bank Actually getting that approval . Tim most economists think they wont hike the base rate, look at 2018. The question is have they learned anything from that . What we learned then is if they had preemptively hiked rates have2017, they would not had the massive Interest Rate hike they would have to do down the line. We are in something of a similar situation now. It is early, there is time. Basicrket is pricing basis i think they were up each 2018 and make the mistake. 100, 200, that could be yet. It could be enough to stabilize the exchange rate. Will they do it . Unfortunately, erdogan loves controlling Interest Rates. He hates Interest Rates with a vengeance. There is pressure from the central bank not to hike. Tom the theme this morning is the idea of aggregate demand. Futures 12. If we get a slowdown in global , i amven just a dampening not talking a lot of drama, what does that mean for em . Em has been doing we are also looking at a deeper session. Assumed covid would be a total disaster. Across the board we thought we would see a host of defaults and restructurings. We have had a few, but actually when you look across the spectrum of emerging markets, currencies weakened initially, then stabilized. Different, little but Central Banks have been able to cut rates. We have seen qb in emerging markets. It has done relatively well. A weak growth environment should not be good for emerging markets. There will be a focus on the u. S. Elections. A biden win might be seen as better for Global Growth. First, a more multilateral approach to solving the worlds problems. Maybe that means more Global Growth. Tom where is the opportunity and full faith and credit debt right now . Saying the election, but if you are looking into 2021, where is the debt opportunity . Tim there are many individual stories. I mentioned restructuring, there thateen argentina, ecuador have had reasonable resolutions, right . See morely will restructuring stories that potentially can bring significant wins to investors. Ems donead highgrade very well. There has been a differentiation emergent very strong market credits and credits that are weak. Credit and the highyield countries, you have to pick your winners and losers. We are going into a very difficult global environment. You mentioned weak Global Growth that will be bad for some ems, but you have to basically take your winners and losers. I do not think there is a big em seen at the moment. That is coming out clearly. It is understanding the individual country stories and getting the country stories right will probably be the key to maximizing the terms of the year ahead. Which, it should always be like that. You also heard the news the russian Opposition Leader in intensive care after alleged poisoning. How does that change the dynamic in russia . Favoriteia has been a of many emerging market investors. People have rewarded russias perceived sound micromanagers. Concerns esp is a bigger concern. I think around russia might concern the elections is we are likely to be entering a period if biden wins, i think a more difficult relationship with russia. I think the biden presidency will hold pressure to account for the same esg concerns. Corruption, rule of law, those things. My sense is what we are seeing we had constitutional change in russia, what is going on in putin ismy sense is clearing the decks somewhat of potential problematic areas. He is building the defenses again in anticipation of a biden win and potential problems with the west. I think a biden residency, we will move back to traditional transatlantic alliances and relationships. I think that means problems for russia Going Forward. Putin will be held to account by a biden presidency. I think investors have to think carefully about what that means. Tom greatly appreciated. George sarah bellus, big figures, a successful trade for deutsche bank. Take his chipso off the table in the vicinity of 120. National politics and the global impact. Dr. Bremmer will join david westin. This is bloomberg. Futures 12. Everyone. Morning Francine Lacqua in london, tom keene in new york. Vix 23. 88. And the a little angst in the market, but far more moving in to bond markets. 30 year bond inside basis points, 10 year yield insight three basis points. Reaction off the fed minutes yesterday. Gold simply crushed. 19. 36 an ounce. When i got into gold, it was about 106. I bought at the top and am not successful on that, as usual. The swiss franc much weaker as well. Right now, in a public service, the mystery of the cloud. Wetalk about the cloud and have cocktail conversations about the cloud, but we really do not know what we are talking about. Winkler is a tour de 68 Cloud Companies that are doing better than good. It is notle you did, about amazon, it is not about microsoft, is it . To the no, but it is extent that amazon and microsoft probably did more than any to two companies any two companies to embrace the cloud and it is very much a part of their business. ,hat we are talking about here francine, good, is the cloud is this ondemand internet availability of computer systems. That is about data storage and computer power. It does not require active management by users. It is developed by bigger companies, but more important, it enables anyone lacking a vast expensive Storage Capacity and power for their devices to rely on this neverending set of data centers. In the process, it makes it possible for companies to survive no matter what shape the economy is in. There are wonderful examples of this. Tesla is a great example. We dont need to talk about it because i talk about it too much, but they are the best example in terms of valuation. There is this company in San Francisco called. 180 during the pandemic period. It gets 71 of sales in the u. S. It sells and creates text, voice, video communication tools that have become more valuable in this burgeoning market for online learning, marketing and virtual communication. There you have a great example of something that was accelerated by the pandemic. Tom it will continue this morning on bloomberg radio. It is an important article, i will put it on twitter. It is names i do not know. I am not up to speed on data dog, but there it is. We talk to matt winkler later this morning. Coming up, i really like talking to andrew slimmon. Futures 12. This is bloomberg. Tom this morning, the fed minutes were clear still clear were cliffs tom a number of participants looked at a couple of scenarios and came up with a few outcomes. A majority of the market took it yield curvenger control, not so much light. Gold plunges. Swiss franc weaker. Yields lower. The senator from california states there is no vaccine for racism. Good morning everyone, this is bloomberg surveillance. From our World Headquarters in new york and london. Francine, it is global. The market is on the move, but there are side stories. Suddenly, out of russia, the bureau the bureau the brutal reality of a poisoning. Francine it is not a small story. This is the Opposition Leader in russia