President trump aggressively denied the story, with, i believe, four sources cited early in the article. It is amazing how one story can shift a dialogue. Francine shift the dialogue, maybe, tom, but i dont know what impact it will have on the polls. Polls, it is one of the interesting conversations in an election year, banks realize they could be one of the most volatile moments in the markets, if you look at the states or whether there is a broader change of heart toward change of mind when it comes to that november election. H, brilliant on that yesterday, talking about the swing state polls as the thing to watch in september. Right now in new york city with our first word news is karina melcher Karina Mitchell. Karina republican the democrats have agreed on one thing secretary Steven Mnuchin and nancy pelosi are working to avoid a Government Shutdown before the election. Up a vital holding stopped spending bill clears the way for the government to stay in operation at the start of the new fiscal year. Meanwhile, President Trump has denied a magazine account that he disparaged americas war dead losers. According to the atlantic a, the president try to get out of a visit to the graves of American Marines killed in world war i in france. He reportedly said, why should i go to that cemetery . Losers. Led with the president calls the account a total lie. The suspect in a shooting of a white print rightwing been killed. He was a vocal supporter of the farleft antifa movement. Sawu. S. Labor market improvement in august, which answers further onsite gains are diminishing without the stimulus payment. The monthly jobs report is out at 8 30 a. M. New york time this morning. Economists are projecting an limit rates dropped below 10 for the First Time Since march. Global news, 24 hours a day, on quicktake,loomberg powered by more than 2700 journalists and analysts in more than 120 countries. I am Karina Mitchell. This is bloomberg. Francine . Tom . Tom karina, thanks. Equities, bonds, currencies, commodities. Other parts of the greater market not participating. Futures rebounding up 22, dell futures of 37. I am going to call that highs for the session. To 24, and then we blew out to 33 yesterday, 31. 52 right now on the vix. Quietrket shows a real since, perhaps waiting for the jobs report, francine. Francine yeah, tom, i think it is all about the jobs report, and it is also ahead of a holiday in the u. S. , of course, on monday, so we could see a bit more volume when it comes to european trade. Trade is more subdued maybe than last week. Investors holding off making trades before the jobs data and maybe before the u. S. Holiday weekend. European bank stocks actually rallied after news that two banks are exploring a 14 billion euro merger, tom. Tom the jobs report coming up into a half hours. Joining us now is Catherine Mann of citigroup, their global teeth economist, chief and she has codependency analysis of china in the United States and then proving at the oecd she can do Market Economics like nobody else. It is a rare abuse. Catherine mann joins us this morning. Lets go over the jobs report here. Lets go over the nuance of what we will observe at 8 30. Catherine well, you know, the question is, you know, how many people come back to work and how many people are coming back on the pandemic unemployment assistance program. The decomposition between those two programs i think is a very interesting one to pursue, because if you go off of one end onto another, you are not improving your job situation. I do think that is an important piece of information. Yesterday, thet Economic Policy institute, folks, when you take the better news of the unemployment claims and then your jobless claims, and then you add on the pandemic report, you really dont get much of a decline. Catherine mann, in the jobs report, we have always had the greenspanschairman on employment rate, and then the Unemployment Rate. What is the Unemployment Rate right now of the United States of america . Catherine well, you know, there are a lot of people on furlough, and one of the important questions Going Forward is how many of those furloughs turn into firing, because that will make the Unemployment Rates go even higher, and it is a situation which will affect peoples excitations and their consumption patterns. We have heard some announcements from some large hospitality and of course the airlines about going from furlough to firing. We have got Small Business arguing that, you know, if not more assistance, they are going to go under, so this jobs report is important, but i think, you know, in terms of valuations and so forth, we have got to look beyond just the what happened this week, what happened this the longerterm, and the longerterm is not looking good right now in terms of support for the function and therefore investment and growth in the u. S. Economy. Francine catherine, good morning from london. Are these jobs that are permanently lost, are they companies that are going bust, or are they Just Companies downsizing . Catherine well, on the Small Business side of things, you know, there is a lot of turnover and Small Business, that time iod between going bust and Small Business do go bust. Those jobs are lost to the time, and the time can be a very long time. At very low income levels as well. That is one of the problems here, people at the lower income levels, the ones who are always on the edge, are the ones who are carrying a particular burden this time around. For the furloughs to firing, that was, again, hospitality, airlines, those are still quite a bit at risk. I mean, airlines and only about 50 travel rates, and, you know, if you ask people, are you worried about going to a large group gathering, 85 to 90 still say yes, so that is not good for going to entertainment or going to, you know, the concert venues. That is hospitality. Francine when you look, catherine, at, you know, what happens the next three to four months, lets say the rate of are thens goes higher, winter months the crucial months . Catherine well, i mean, what is interesting right now is that winter months are coinciding with what many of the Vaccine Developers are saying are potentially very good months, for actually coming through with a vaccine, so they are balanced between, you know, the winter months with the regular flu and the vaccine. That is an interesting balance to consider. But i do come back always to how do consumers respond . You know, just because there is a vaccine, does that really make them think that, yes, i am going to go back and do things i used to do before . Certainly some seem to be perfectly happy to go out there and mingle and have fun and would go to the concert venues, would go to sporting events, but the older generations, it seems, much more concerned, and when it comes down to it, the old people have a lot more money than the young people do, and so that has implications of spending patterns. Tom Catherine Mann, linking in this jobs economy to aggregate demand and the greater sense of gdp, on the back end of the equation is the Catherine Mann netable, exports. It is not pretty right now. How large is the dampening impactof the clouds of the collapse of world trade going to be . Catherine next month, i would say trade is completely on the back foot, but our Early Warning indicator throughput index does indicate that there is some coming off of a bottom. Now, you know, i think we have to be very careful, because coming off of a bottom still means trade contraction of about 5 . Isl, trade contraction of 5 better than trade contraction of 15 , but it still represents a contraction. This is a very important ingredient not just for the United States but also for a lot of other countries around the world, and, so, you know, collectively, this trade contraction is something we are viewing is a very severe headwind to the global economy. It may improve a little bit, but, again, this notion of rebound is a very different word than recovery. Rebound just means to get back to where you used to be, and that was not a great place. We did not we have not made up any losses at this point. We are still not hold. Tom Catherine Mann, whole. Tom Catherine Mann, thank you so much. I want to address the codependencys of our international economics. Nationalkudlow, our economic structure, he will look at the codependency of the clinicals is and as he looks into todays clinical season as he looked into todays jobs report. Look for that with Jonathan Ferro in the 10 00 hour. This is bloomberg. Good morning. Francine this is bloomberg surveillance. Tom and francine from london and new york. Still with us, Catherine Mann, chief economist at citigroup. When you look at the World Economy right now, where do you see the most scoring, and how deep will that scoring actually carring, and how deep be . That scarring actually catherine one ofcatherine the important disconnects is the at which our own economist sadie the level countries get back to precovid level of ddp is maybe next year or 2022, but no one is talking about getting to the precovid level of unemployment for the precovid level of employment, and i think that disconnect between people thinking their economy from the measure of gdp is going to be coming back no one says that for unemployment, and that says that there is an extended period of time where we are going to have very high Unemployment Rates, and we know that the scarring from the Global Financial crisis, which is a whole lot like this in terms of the gdp dynamics. That scarring was particularly damaging to the younger generations, because they are the ones who are not getting the first job or are not getting the raise or are not getting an opportunity to develop into their careers. So, in some sense, the younger generations are the ones who are most scarred. It happened in the Global Financial crisis. I am concerned it is going to happen here as well. Francine could it be ugly . How does this differ from what happened in the financial crisis . We were in a much better place. Catherine well, i am not sure we are in a much better place. I mean, from a standpoint of banking, you know, the stability of the banking sector, yes, we are in a much better place, but in terms of where we are in unemployment, where we are in business investment, where we are in consumption, we are not in a better place. We have higher inequality, we have got lower productivity growth, so we are not actually in a better place. And of course one of the things that the Federal Reserve is trying to do through its policies is trying to avoid having a whole range of financial meltdowns, perhaps in what still isnto a very fragile recovery in a global economy, so, you know, i would say we are not in a better place right now. [laughs] is thetherine mann, codependency shattered . I just moved, and 98. 2 of the junk i bought was made in china. I think the rest of it was made in vietnam. With all this trade uproar, this administration, have we shattered our codependency . Catherine the trade relationship has changed dramatically, although the codependency, which back then, yourars ago i suppose furniture is 10 years old, i dont know that was with regard to goods. Now we have a codependency that is still there, and we are trying to rip it apart, with regard to technology and Information Technology and ai and those sorts of things. Very there still is a strong codependency between the u. S. And china on that, simply because of a lot of production being there, but also some of the higherlevel technologies. So of course the issues with regard to, you know, the Large Technology companies is the breaking apart, the efforts to break apart that relationship. Side, there isl the deeper thing on codependency with regard to financial flows, as china, as it has been added example, and, for up waiting the shares as they are expanding the ability of u. S. Companies, Financial Institutions to enter into their financial markets. So if anything, there is a deepening on the prospects of financial flows, even as, you know, we know that there are some pieces of legislation with regards to having china in certain kinds of portfolios, and of course some concerns with currency, countervailing duties, and some concerns with on the china side with purchase of treasury securities. Tom right. Just because of time, dr. Mann, i have got to get this in. It is so important. What is our best practice of technology codependency . What would you recommend is the best u. S. Practice with china . Catherine so i think the issue there has to be about full transparency about what is going on inside the box. That is necessary not only to assuage concerns about National Security, but it is also necessary for companies to be able to work together, so that has been a challenge, because, of course, inside the box is very proprietary, but there are standards setting bodies where it is the nerdy people, who do have the wherewithal to talk to each other about what is inside the box. And that is inside the algorithms. And i think that is the way we have to go. I think that is the way we should go in order to have a deep relationship on the Technology Side and of course bringing in other economies, europe, australia, etc. And japan. But i dont hold out hope that that will happen. That would be best, but i dont hold out hope that that will happen. Francine catherine, when you look at your projections, you know, in terms of your gdp inflation forecast, how do you model a possible second lockdown . Livednd lockdown likely like we lived in march, april, in the western world, something we are discounting at the moment. Catherine i think we are not going to have a second lockdown. Europe,countries in japan, so forth, these are countries that have been able to target efforts to problem areas. In the United States, there is simply not going to be a whole scale lockdown, the whole states will take a much stronger role choosing the strategies that is seem to be the most appropriate one for them and have a much lighter hand because of the economic damage would be too great. And also, there is a terminus hope that, you know, the vaccine is around the corner. Tom dr. Mann, thank you so much for the brief on the American Labor economy and of course breaking work on china. She is chief economist with citigroup. Coming up as well, someone who can keep up with dr. Mann, someone down at new york university, the laureate paul romer, fascinating on the changes in our world, and the 10 00 hour. It is jobs day. Stay with us until 8 30. This is bloomberg. Karina this is bloomberg surveillance. I am karina. Mitchell with the Bloomberg Business flash. They need more time to build a strong case. Some are concerned barr wants the case this month for political reasons. Charges against Goldman Sachs dropped in the 1mdb scandal. Last, goldman paid malaysia 2. 5 billion to guarantee the return of 1. 4 million from 1mdb asset fees around the world. Misleadingaccused of investors while raising billions for the investment fund. China has joined the yum china has joined the ranks of selling shares in hong kong. The operator of kfc and other restaurants traded 2 billion on the listing. It is waving a ride of enthusiasm for ipos. They get a big bump from jack mas group. That is the lumber business flash. Bloombergine . Business flash tom, francine . Tom karina, thank you. Equities, bonds, currencies, commodities. The 29,000 level. The vix came into points earlier, one point now, 32. 31, and yields up about a basis point well. Francine . Francine tom, i am looking at european stocks rebounding, treasury rising. I know you mentioned that. Interesting what happened in europe, because we did not have a selloff earlier on, and now bank stocks at a rally, after we have that kaichen kens bank bank in spain and are talking about merging, and it will take a step, but it is something we need to look at for emerging stocks for a third day. Coming up on the open, a full line of guests, including rick rieder of blackrock. That hour with jon ferro, that is at 9 00 a. M. In europe, 2 00 p. M. In london, and this is bloomberg. Valuations, particularly through the technology landscape, have gotten through some particularly its ordinary levels, so i think it is not a surprise. Between growth and value has been on the table for a while. It means have we been able to hold a significant lead as we coming to favor where they stay in favor. Prices impact and continue to go up, their volatility goes up, too, which is not a normal relationship. It is usually inverse. And the fact that we, you know, upended tony, 30 years of that relationship and are starting to get that, that made me nervous. Barry the craziness in this 2020 summer of love for investors was getting out of hand, and of course there is the robinhood and aaron against robinhood shenanigans that have been going on, so it is not a surprise. Julian if you have to Much Technology in your portfolio, now the time to take it off. Downside outside, movement here. James we are looking at a rotation out of the outperformance, sort of a blast from the past, if you will, but we are looking at those stocks. Susan it is the beginning