What is so interesting is where central bankers will be. Mark carney, the governor of the bank of england, it is just out across the bloomberg that he has finally landed. I thought he would be running the toronto maple leafs, but he will join the venerable brookfield of toronto. This is one of the Sterling Companies of canada, 100,000 strong. Esg. E will go all lisa hes going to be leading the environmental and social governance Investment Strategy at brookfield, which is eventually expected to rival the size of its real a structure businesses. The question is, what does this mean . Tom this has clearly been one of the leading efforts of the former governor of the bank of england. Our Francine Lacqua numerous times in interviews on esg as he led the bank of england, i would say more than any other central bank. Maybe i would get a hat tip to the bundesbank as well, but clearly leading on esg. I heard him speak on this at davos as well. This is to me a very natural outcome to see him join brookfield, of course, with all of their Real Estate Properties in the heritage of toronto as well. I also think he just joined to get their seats at maple leafs garden. Lisa will you try to position for some . Tom maybe we could win the canadians are in town. What weve got right now is a churn to the market, looking at jackson hole. Michael mckee with that Esther George interview in the last hour, really setting up the Virtual Conference in the speech tomorrow by chairman powell. Really quickly before we get to dean curnutt, what are you looking at this morning . Lisa im looking at bond yields, trying to understand how much Inflation Expectations ticking up says ahead of the jackson hole conference. Is this a bet that they are going to be successful in igniting inflation . If that is the case, where is it going to come from . Is it just printing money . Tom dean curnutt is at macro risk advisors. He does really sophisticated, fancy stuff around capturing volatility, and what you do is you traded. You buy volatility or you sell volatility, and the trademark and the benchmark for that is the vix that we quote. Curnutt, the vix right now 22 just ints broken celebration of you being with us. Where should the vix be right now . What is your guess on the direction of the vix relative to the market . Dean well, that is a great question, and i think theres a couple of ways to answer it. The simplest way is just to look at the daytoday movement in the s p, what we call the realized volatility. If you look at that over the sot 10 days, its only 7. 3, its just this series of quiet days in the market. Over the last month, it is 10. 3. So the vix at 22 is trading two to three times what the movement in the s p would actually justify. Theres always a little bit of a premium, but really what is happening, i have to say it is one of the most fascinating times to look at volatility in the equity markets because theres an event that has some import in early november that sticks out like a sore thumb in terms of ricin. Market isords, the pricing vix futures so contingent on the end certainty around the election, it is causing some substantial dislocation. So to answer your question, the vix should be much, much lower relative to the movements in the s p 500 then it is, but the election is holding every thing up. Tom how money figures lower should it be . I dont want to take you out to tenths or hundredths, but should be at 19 . Should it be at 15 . Dean you could easily argue the vix should be in the 14 to 18 range. Tom wow. See how i did that . I got it out of him. Lisa for people not necessarily looking at the exact level on the vix, what does this mean in terms of trading volumes, and terms of trading activity . Theres been this feeling in markets that the fed has your back, they are going to suppress volatility, and that is going to make the riskadjusted returns more attractive. Does that hold, even though there is that blip up around the november election . Dean vol and volume tend to be pretty correlated. People change their mind when theres a lot of volatility. So the absence of that is leading to a pretty quiet latesummer, with the notable exception there is quite a bit of activity in upside call options in some of the tech behemoths. As really the only place in the market where you see a substantial amount of volume, is the momentum stocks like tesla, where we are seeing a lot of volume. So it is a quiet period. I think for the folks that use options, it is a bit of a conundrum. As i said, options are expensive. Thinky an option when you insurance that comes with just paying the premium is a good deal. Its really not a good deal. The price of the option relative to the movement in the s p, theres a big disconnect there. But secondly, people be remain worried that the bottom could just fall out of the market. We had just well past the peak of the crisis, on june 11 the market fell 6 in the s p out of nowhere. I think those types of real oneday shocks still linger large in peoples minds area even though options feel like it better sale then to own, people are still worried area so what you see is just kind of a standstill and not that much volume. It is slow on every front. Going forward, what we have seen is volatility, this idea that it can seem like a very calm market, but all of a sudden you that incredible spike, and that is what you were referring to when he said that things could get a little bit more spicy later on. What is the main asset class to look at, the main trigger point that could fuel that kind of vol . Dean theres a couple of things that will cause that. One is positioning itself. Sometimes the market trips itself a. It is not the economy, not something on the geopolitical side. It literally is positioning. I dont think that right now there is a substantial one sidedness of positioning and things like the vix or the s p that might cause that. In early 2018 when the vix blew up, it was really about that melted down because it had gotten so big. Gold. I would look is in talked about this real interesting dynamic where inflation is rising rapidly. Gold is very negatively correlated to real yield, and as we look for hedges for folks, the market price is the amount. The market kind of sees the debt demand for hedges coming and makes insurance on the s p very expensive, but i would look to gold. I think there are some really interesting opportunities to use options. Nothing crazy, just things like upside calls out to december. I think theres a couple of ways to win. Potential unwelcome reaction to a biden presidency if that the u. S. That he will be less business and Capital Markets friendly. The second, i do think it is a long up at gold is paranoia assets. It does well in chaos. This election is not setting up that well for a clean transfer, and i think that is going to be a worry for people. Tom bobby from x capital just eat amount be just emailed me and said, wheres the capital . We need a change that get going. Into is your gamma september and october . Dean you guys have been talking about the yield curve, but when we look at options, it is on the right side. That is one area where implied volatility is pinned to the floor. It is no wonder Jerome Powell is basically telling us what the playbook is going to look like, which is dont expect any change for years to come. I think if you step back and think, what if things actually go right, it is hard to surmise, but suppose that we get great advancements on the vaccine front, and suddenly the notion that fed policy is stuck at zero for years to come is revisited. What i am saying is the common nation of incredibly low yields out to 2, 3 years, and incredibly low implied volatility come up what we have been telling clients is use optionality to protect yourself not only against bad scenarios, but against scenarios that would be good for the economy, but could potentially derail some aspects of the market if yields move higher very quickly. Tom dean curnutt, thank you so much. I had no idea what he said. It is so fun talking dynamics with dean curnutt. Youve got alpha, beta, delta, gamma, all of these greek. Etters but lisa, gamma is what we are all searching about area. Lisa i think you are trying to relive your fraternity days by talking about gamma. You bring it up every time simply to talk about the greek alphabet. Tom im looking for some chi and some psi in there as well. On the equity markets, up three basis points on yield. ,ean curnutt moving the vix 21. 72. You heard him say 14 to 18 as well. Libby cantrill does not care about gamma. Shes with pimco, next. This is bloomberg. With the first word news, im ritika gupta. A warning today from the National Hurricane center. It now says hurricane laura will rapidly strengthen to a category four storm with winds of at least 130 miles per hour. It is expected to make landfall late today or early tomorrow along the louisianatexas coast, and could bring with it a lifethreatening storm surge with a wall of water 15 feet high. Ed has already disrupted oil and natural gas operations throughout the region. On the second night of the Republican National convention, speakers tried to humanize President Trump and highlight his leadership. First Lady Melania Trump spoke from the white house rose garden. This trump i dont want to use this precious time attacking the other side because, as we saw last week, that kind of talk only serves to divide the country further. I believe that we need my husbands leadership now more than ever in order to bring us back once again to the greatest economy and the strongest country ever known. Secretary of state mike pompeo said the president has made historic progress towards middle east peace. In wisconsin, the governor has declared a state of emergency. There is a third night of violent protests in kenosha over the Police Shooting of a black man. His misses were vandalized and buildings set on fire. Shots were fired in a confrontation between protesters and a group of armed men. Two people were killed, and one was wounded. That trade deal with china may pay off for farmers in the u. S. Area bloomberg has learned that aging is set to buy record amounts of american soybeans this year. 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. Payroll tax cuts for higher wages, income tax cuts for the middle class, Capital Gains tax cuts for investment, productivity and jobs. Held chinaident has accountable for covering up the china virus and allowed it to spread death and destruction in america and around the world. Trump and myms. And who willhave not stop working day and night. Tom there are some of the forces of day to of the Republican National convention. We will have that tonight for you with david westin as well area Vice President pence the key speech tonight. Right now and arguably the interview on the day on what doesnt matter at the conventions, Libby Cantrill joins us, pimco head of public policy. Springs in arkansas are doing well. They are removed from all of this trauma. Then you go to kenosha, wisconsin and the uproar of the last three days, including deaths last night, and in between, theres a huge part of the country desperate for stimulus. Can we get stimulus once this convention is over . Libby good morning, tom. Thatve been talking about additional stimulus was a question of when, not if. That when has taken longer certainly than i thought it was going to. The sort of perennial stumbling blocks around the level of benefit, specifically as it relates to unemployment insurance, local and state funding, a big issue for democrats. They got very little in the c. A. R. E. S. Act, 150 billion dollars for states and cities. Democrats want more in this next round. And then funding for usps, these are the obstacles really to getting a deal. I think the Inflection Point will likely be the end of september. That is when congress has to come together to pass a funding bill to avoid a government shutdown. So we may have to wait until then, and again, we thought it was going to happen sooner, but some of these partisan issues have gotten in the way. Mentioned abramowicz american airlines, taking down 40,000 with early retirement. Our politicians in your world moved by actual firings . Libby i think if you talk to folks on the hill, there is an acknowledgment that certainly, the economy needs another shot in the arm. I think these headlines certainly underscore that, so i think there is broader acknowledgment that the Political Risk in particular going into the election without having additional stimulus, speaking to your point, just the headline risk of going into the election, companies announcing more firings is just too great for politicians. So i think it will come together to pass something. It is just taking longer than what we expected. Much we are not hearing noise out of washington other than the rnc and the dnc, and yet every week, they say there is a hurt to the economy due to the lack of extension with this program. How do you help them gauge the risk of a prolonged negotiation process . When can they expect some kind of deal to get done, and what are the consequences of the delay . Libby the earliest at this point, given that folks on the hill are out for their usual august recess, really is going to be the middle of september at the very earliest. That is when they come back, so that is really predicated on a deal being struck before then, but probably, as i said, late september. That is when congress has to come together to pass the funding bill to avoid a government shutdown, and it looks very likely that these things are combined. From an economic perspective, we are seeing some states apply for that added benefit that the president authorized under his executive order. There are some issues with that, and of course, that benefit is about half of what we saw under the c. A. R. E. S. Act, and it only lasts for four to five weeks. , obviously. A risk we are seeing some of the consumerry data, confidence lagging. You are seeing other data metrics that the economy is once again slowing. So theres a broad notion on the hill that something needs to be done. It is just a question of how they get there. Lisa is it underpriced risk that it will take a while . Libby the market does seem to be pricing in some additional stimulus, so certainly that is a tale risk. If everything parts apart if everything falls apart and we dont have a deal, folks will be campaigning for the election, and then it does look area unlikely that we get something until after the election. Risk. Ertainly is a tail it doesnt seem that markets are necessarily focused on that. Tom in your world, is there a middle ground, a middle democrat, a middle republican . Do they had a voice now and r . Ter novembe libby there are certain ce constituencies on capitol hill. Theres the Problem Solvers Caucus aimed at that demographic you talk about. This will obviously be predicated on the election outcome, but something i think is very important, especially for the markets to keep in mind, if there is a democrat sweep, if joe biden is elected to president , democrats control the house and win back control of the senate, you have to make remember, those are from purple districts or even read districts or red states. A moree will be moderating force within the democratic already who are probably going to be more inclined to start reaching across the aisle. I dont think centrism is totally dead, but obviously over the last decade or so, our politics have become so polarized. Gerrymandering i think has exacerbated this, lack of earmarks has exacerbated this. Tom Libby Cantrill, thank you so much. I want to make some clarification on the hurricane. We had an official headline of rapidly moving towards a category four hurricane. That has changed. Moments ago, we have a headline according to the nhc that hurricane laura becomes a category three major hurricane. I want to make clear, that is still an abrupt change from where we were two or three days ago when the hurricane was below cuba, so it is a tense morning down on the texas and louisiana border. I really cant say enough about the need for the stimulus from where we sit. I know we are biased within the threes it codes we live in, but the immediacy of need for stimulus, we are hearing that from toomey economists. Lisa we saw that last week at the unlemon claims that were above one million again, expected to be about a million yet again this week. Still so much going on out there that indicates further job cuts to come. Tom we will see that throughout the day, and of course, Kevin Cirilli im sure well get right with others on the Stimulus Team as well. Geography between houston and new orleans. Borderhe texaslouisiana , that northsouth demarcation, forever identified with Galveston Texas and port arthur. They await a storm. Coming up, peter hooper of Deutsche Bank. This is a simulcast. Its bloomberg. Experience the ultimate sports hub. Where you can find games, news and highlights. All in one place, right on your tv. The xfinity sports zone. Use your voice to search every stat and score. Follow the teams you love. And, even get notifications with breaking news alerts and more. With the xfinity sports zone everybody wins. Now thats simple, easy, awesome. Say xfinity sports zone into your voice remote today. But what if you could stdo better than that . K. 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. Tom bloomberg surveillance, a simulcast. Bloomberg radio and bloomberg television. Jonathan ferro is on a well deserved sabbatical. Lisa abramowicz and tom keene giving you the data. This is beneath the headlines, but it is important to look at durable goods and camp goods, nondefense exiphone, examazon and exminecraft. Michael mckee with our economic report that