off the ounce, 20% lows. quiet markets, except bonds. economic slowdown and disinflation. we will see with the chancellor says in london. this is the summer of stimulus, and chancellor has a plan for job. a congress considers a plan to spend nearly $1.5 trillion. it is a "calm before the storm." additional debts will follow the surge in virus cases. president trump says america will lead the world health organization. the president says go back to school. brazil, brazil has a is it a little cold."

it is a deceptive wednesday to say the least. we are focusing on stimulus and will do that across all of uber surveillance this morning. -- "bloomberg surveillance" this morning. the president of brazil, and this is a statement, he has a little cold, has the virus as well that is touching us all worldwide. francine: it is. we have been trying to track the virus to understand what it will become. it is clear is is a bit more under control. in china, in europe, and but it is ravaging many parts of india. it is concerning in latin america and certain parts of the u.s.. we are trying to figure out what that means in terms of lockdown and what it means the impact, future impact, on any reopening of the economies. tom: without question, the zeitgeist asked america with the resident's event yesterday -- president's event yesterday is

children and back to school and what that means for the economy. news, -- now word to our first word news. >> a temporary testing site is being set up in louisiana, texas, and florida that could help health experts get a clear picture of how the coronavirus is moving through the population. officials are weighing how far to go in the reopening of the economy or rolling back steps already taken. brazil, bolsonaro is defending his approach to the coronavirus despite the fact that it has killed tens of thousands of brazilian and left him with the disease as well. bolsonaro called the virus a little flu and talked to dr. zhang government officials. the president in mexico is taking the biggest gamble of his office. he is in washington to meet with president trump.

despite the advice of some of his counselors not to go. he wants to safeguard the commercial connection between the two countries. the trump administration is considering another way to punish china for imposing the national security law on hong kong. president trump once to undermine the hong kong currency versus the dollar. global news, 24 hours a day, on air and on quicktake on bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. this is bloomberg. francine and tom? tom: thank you so much. equities, funds, currencies, commodities. futures little green, negative five. you'll market moves as well.

yields are lower all in all with curve flattening over the last two days, indicating the global slowdown. people are gaming q3 to q4. front and center is a spike in gold. right up against 1815 the ounce. francine? francine: if you look at gold, it is definitely approaching 1800. the dollar are steady. there are couple things going on old. i think they are also looking at what is going on with global equities, struggling for attraction after last week and the concern it will take longer for the broader economy to be recovered. i'm looking at tensions between the u.s. and china that have been rowing after beijing asserted powers on hong kong, which has poured cold water over hopes the world's largest economy will suddenly patch up

relations soured by this lingering train spat. -- trade spat. ,om: i should point out bloomberg has been very good about this. there are different ways to vote gold. i'm quoting an american interest price. francine is off spot gold. frankly, there are three other ways to vote gold as well. it's a little squishy when you are talking about quote in gold. there's nothing squishy about the writing of william lee. he was known for years at the international monetary on for clear wisdom on they pacific rim -- on the pacific rim. now, he is with milken institute . way too long since we haven -- had an update from william lee. what is the significance to china of two aircraft carriers going toward the pacific rim and south china sea? william: i think the covid virus

and survival economics blinded a lot of investors on the global tensions going on. tension is global the war between china and u.s. for sort of global positioning. this was the discussion during the phase i-phase two trade talks when we were saying the two largest economies in the world have got to decide how they determine the rules of engagement. that got aside with the virus to that is still in the background. i think all of the military muscle lacks we see on the part of china and our response is a continuation of the same discussion of how do we determine the rules of engagement between two large superpowers in the world -- two of the largest superpowers in the world? tom: i've been dying to ask you this question, maybe a political question away from imf, and that is how to triangulate beijing, hong kong, and taiwan and

taipei? his hong kong discrete and separate from the discussion of the future of taiwan? william: that dynamic has gone back to sort of the initial arrangement. remember, i was the first i am a resident i -- in hong kong. at the time, the discussion was what was the future of hong kong? we see that has evolved over time to where it has become one country, 1.5 systems and maybe even only one system with the new security law. the boss of hong kong's sovereignty from the western rules of law and is duchenne's that made hong kong unique, one of the rings -- one of the things we have to be concerned about would be how it perceived -- proceeds in reacquiring its robin says. for taiwan, the question is whatever happened the hong kong

happen more so to taiwan. know --t do we francine: what do we know about the foreign policies in the u.s. under candidate biden? do we have any clear idea of how foreign policy would change under a new president? william: i think the competition between the u.s. and china has come back summit -- gone back so many decades that both democrats and republicans are gathering their positioning in sense of being nationalistic. a lot of democrats, even representative losey, has been aggressive in trying to maintain u.s. property rights, in order to get agreements that reflect the need for having worker rights. a lot of western values are being put into the agreement on both sides. under the biden administration, you won't see that much of a difference. may less belligerence in the

tone of discussion, but the positioning of the united states has been clear for many decades. bill, when you look at the u.s.-china relationship right now, what is it about? is it about hong kong? is it about the u.s. blaming china because of the pandemic? how does this unravel? william: a lot of this discussion has been one-way. it is a response from the rest of the world and not just u.s., but australia, and the western world to china positioning itself. in a lot been engaged of expansionary moves to try to reassert itself as a global power. china has been boxed out so many decades from the global discussion. it has been regarded as an emerging market and relative to the g20. done isna has

[inaudible] it has done this with military in the south china sea's, and reacquiring its power over the ranking provinces in taiwan and hong kong. maybe moreu are qualified than anyone i know to answer this. you have had lunch in every hotel in hong kong, shopped at every product. have any do the banks power to keep hong kong somewhat the way it is, or do the western -- or have the western bank lost the power to do capitalism in hong kong? william: i think that was the fantasy of the initial discussion of one country two systems, that somehow by retaining the western rule of law, retaining ability of western companies to operate in willkong, that influence expand and extend possibly into

revising some of the way china does business. over the last several decades, that has not been the case. china has been consistent, especially on xi jinping, on how socialism with chinese characteristics is the way they want to go and they are determined to become, as a frontier of setting standards for technology and industries, where u.s. doesn't have real dominance yet or it is unclear whether they can retain the dominance. china has not bend into the ways of the rumors of the one country two system policy, of wanting to somehow integrate into the world economy. getting a seat at the table at g7 means also extending socialism with chinese characteristics to the rest of the world. tom: just a terrific read. william lee with us from the milken institute. much to talk about this morning. the market is quiet.

gold surges something to talk about, but all in all, i would say today, a thought set of discussions, including what we will see from the chancellor. coming up on trade, ronald kirk of dallas. this is bloomberg. ♪ this is bloomberg. ♪

francine: this is "bloomberg surveillance." tom and francine from london and new york. still with us, william the milken institute where he is chief economist. we were talking about the trade concerns between the u.s. and china and some of the things

that could flareup in the asian region. when you look at the u.s. domestically, what makes you worry about how funds are distributed. william: in the u.s., the fed has done a great job of trying to calm capital and debt markets ey are tryingth to be a participant, a buyer of debt. everything toward debts, corporate managers are incentivized to invest in sustainable technology. the main concern is paying back the investor who wants his money back and doesn't care how much you make. if we have allowed the fed to support the equity market and that our kids by ensuring the equity markets, by buying baskets of equities, that equity finance will incentivize managers to invest in projects that will go for high productivity and profits.

in my research work, a chart i put up shows there is a negative relationship between the amount of debt in the sector and productivity. because wheneasy you are incentivized to pay back what you owe, you try to ensure safety and no credit risk, but if you are incentivized to say, let's maximize profits, productivity, investors don't care what you are doing and -- doing as long as you are doing it right. take for what will it that to change? onliam: the fed is focused its transmission channel, which has traditionally been through the debt markets. market operations are focused on u.s. treasuries and issuance, but now that we know the virus

has really affected the way companies operate, the structure of the post covid economy will be different than what we see now. topanies are going to have become more efficient and adaptable to the new way of doing business in this covid world. in order to do that, managers have to be incentivized to be innovative and that only comes about with equity investors and not debt investors. has made me very aware on capital structures of managers. tom: i will go with that, but the bottom-line is that there could only be so many amazon's. if we have industries that are malleable and flexible, or they can find the innovation, great. what about everyone else? is it one big merger in combination into the future to find efficiencies through merger? william: even your small businesses, if you are a guy with dry cleaning and your major investor says "i want to make

sure i get my money back, and don't you dare experiment with take-out services because i know you don't have any take-out services. instead, i want to make sure the dining experience was the same it was before," you are essentially out of business because you won't innovate. if the investor comes in and says i want to make sure you adapt your business and that we share profits going forward and become as successful as you were before, you will be learning how to be more access friendly, take-out friendly, and maybe expand in a way that you haven't thought of before. these are innovations we need and it will not come about if you are loaded down with debt. francine: if we have the assumption -- tom: if we have the sumption, and you are qualified to give perspective, where america is leading in

technology, how do you at the milken institute respond to what they see in europe where they can't but -- can't figure out how to do knology. -- technology. william: an example of where innovations have been in manufacturing and extending existing technologies and refining technologies, because europe is so heavily based financing. silicon valley, most of the in 10, they invest projects and hope one comes through. that itself is an example of where bank based debt financing to innovation. they need to continue operations but existing operations. the innovations come from ownership type financing, and that is what we have in the u.s.. tom: william lee, thank you so much. we have much more coming up.

surgeryonitoring gold -- surging. i believe iner, two hours, austin gold to be, formally with the obama administration, of the university of chicago. this is bloomberg.

>> this is "bloomberg surveillance" and i'm brick to

goop to -- ritika gupta. agreed to by a national general holdings for about $4 billion in cash, coming out to a 69% premium over national general's close yesterday. largest -- the parent company of quicken loans has filed for an ipo. they have made a profit the last three years. rocket describes itself as the largest retail mortgage lender in the u.s.. itsbook is just out with third civil rights audit report, and auditors say the social network has a long way to go. facebook has deepened its relationship with civil rights groups and leaders. still, the report disagreed with the company when it comes to fact checking politicians. a number of civil rights groups met with mark zuckerberg and called the meeting disappointing.

that is the bloomberg business flash. tom and francine? tom: equities on, current commodities -- currency commodities, quiet out there. nasdaq 100, fractionally above. gold is out, and u.s. pricing near 1858 -- 1815 per ounce. francine? francine: u.s. futures are drifting, european stocks are slipping. hsbc is slumping after reports some of trump's advisors proposed they moved to destabilize the hong kong currency's peg to the dollar. treasuries in the dollar are pretty much steady. a couple things also is european leaders today our meeting. they will operably greet at a summit on this massive spending plan aimed at reviving their economies. we should also look at euro-dollar to see what happens with that. i head of the chancellor coming

out with his many budget. live, daviddership rubin signed with ken frazier. that interview is 4:30 p.m. in new york, 9:30 p.m. london. we will track the virus, talk about the possibility of a vaccine, but also some of the drugs out there working to fight the virus currently. this is bloomberg. ♪ ♪

>> i think we want to make sure that people that are still unemployed and hurting are protected. >> we want to make sure we are not allowing a big blow to

household income and consequently to consumer spending. wantt at the same time, we to kick into consideration -- take into consideration the fact that the economy is bouncing back. >> also making sure we don't have implicit tax rates. >> i want to applaud the governors that have taken decisive action to mandate masks, social distancing, closing bars. >> core elements of our medical supply chain are just as strategic to our national security say nuclear submarines or aircraft carriers. >> there is a lot we can do as individuals but also at the state and local level to support that response and change the course of this pandemic. of the voices managing the messages yesterday on the next round of stimulus.

some are talking about $1.5 trillion of new a coming. age coming.i -- kevin cirilli is our chief correspondent. i'm looking at a website that insists if i'm a small business type, make the most out of the federal relief you deserve. if this thing has been one big giant scam, does the government have any ability to get the money back from people who did not use it correctly or did not deserve it? >> they do. i think there is a reputational risk that companies don't really need the aid, that they face once they are publicly shamed for back of -- lack of a better term. also, from the broader standpoint tom. i asked this to the small business association administrator yesterday when i interviewed her, and she said there are a variety of different tools they can take to prevent

some of this from going on. tom: what is going to happen this time? everyone is talking to senator rubio and others. like this time we will do it better. can they just write out a check to the citizens of the united states? kevin: in terms of where that goes with the helicopter cash, that is an open debate hammered -- debate being hammered out virtually. republicans remind you that up until this week, they have been skeptical about there being another round of stimulus. cases andn uptick in they are recalculating. i spoke with the chief of staff, mike pence -- and mike pence and they say they are in lockstep with mitch mcconnell on getting another round of amulets done -- stimulus done before the august recess. francine: in what way do you think they are leaning towards?

first and foremost, it is definitely more of an expansion and targeting for small businesses, especially given there were leftover funds in the epp account for small businesses area then, there is this issue of manufacturing. not just from a broader standpoint but also making sure facilities and businesses on wall street and main street are able to allow for their employees to come back to work and be safe. finally, and i am not drinking this last but not least is education. democratsmething both and republicans understand, children being able to go back to the classroom ask the psychology of the american family and psychology of the american worker. schools are going to be have to be better prepared for the fall, relying on the data for kids to

go back to school, but also to make the classroom healthy and safe for students and teachers. francine: will they be ready, kevin? kevin: i think it depends. i put that question to dr. birx yesterday. what she told me was that it depends on the data. the federal government is working with local government to see where the data is showing an uptick in cases and hotspots. you could have a situation that is localized for every community across the country, and it could , schoolpon that data several times a week. i would also note that the expectation from the federal government with regard to the vaccination. many are not a one-shot cure-all that would last for several years but would only last or a short period of time. that is beginning to have conversation at the federal government level as to who would

have access to that vaccination first. tom: a bit off of the radar, but a number of older senators are saying they are not going to jacksonville. what does the republican convention look like, a trump rally? interviewediend president trump yesterday, and she got the inside scoop. what she said was that the president -- president trump told her that he is considering -- everything is on the table. that he is very flexible, is the word he used. lisa murkowski, a democrat not -- a republican not afraid to go against the republican party is saying she is not going to go. some of these republicans are up for reelection, it will be interesting. this is normal in the sense that when there is an occupant in the white house, a lot of these

senators up for reelection distance than selves. -- themselves. now, with our first word news in new york city is ritika gupta. >> a clock is ticking on the u.s. decision to leave world health organization. president trump gave the united nation one year's notice of plans to quit. who wasident says the too deferential to china and handling the coronavirus. critics say the move is aimed at distracting from the administration's failure to control the disease. many americans plan to spend less than before the coronavirus hit. 40% of adults say they will cut back on the discretionary spending struggling retailers need according to a nurser -- new survey from credit cards.com. this may compound the

already massive impact of the virus. ofomberg has obtained a copy a tell-all book written by president trump's estranged knees. she describes the president as a man who has led a life of lies. amongst other things, she claims the president paid someone to take a college entrance exam for him. john roberts was hospitalized overnight for a head injury last month. the supreme court says he fell while walking during exercise. a spokesman says doctors have ruled out a seizure. global news, 24 hours a day, on air and on quicktake on bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. i'm ritika gupta, this is bloomberg. francine: thank you so much. withg up, we try covid-19 john hopkins university assistant professor of emergency medicine. that is coming up shortly, and

this is bloomberg. ♪

francine: this is "bloomberg surveillance." as we continue to track the virus, bloomberg developed a partnership with the leading authority of covid-19. john hopkins has been at the forefront. every day, we bring you insights from expert. joining us today is lauren sauer , john hopkins assistant professor of emergency medicine. that are 239 experts basically think coronavirus is airborne. enough says there is not

conclusive evidence. who is right? lauren: i think they are both right. the problem is that there is a difference between no evidence and evidence that there is not airborne transmission. what we see is that we do not have enough evidence to conclusively say airborne transmission is a major driver. have somerosols elements of driving cases, especially in the health or setting, and what that letter i think was trying to say is these aerosols may a bigger driver than what we understood. what we are not seeing widespread airborne transmission like other viruses, there is a possibility that aerosol is driving more cases than we currently understand. francine: if the virus lingers in the air indoors, it changes everything from school reopening's to bars and restaurants in -- restaurants and indoor opening. lauren: absolutely.

the place we worry about the most is a crowded indoor setting with bad ventilation. it is why people are saying they prefer you to be outside if you are going to congregate. that you want more outdoor space, better ventilation, better airflow, further apart. the movement of the air really helps with adding the aerosols out. not that i would ever think you would darken the door of mary jane's in boston university, i'm sure you did not do that your freshman year, but the kids have to go back to school. give us some wisdom of the intractable nature of this from kindergarten up to freshman year at boston university. how do we get the kids back to school? lauren: just yesterday, secretary azar said since we don't see as many cases of spread in health-care settings, we can apply the practices to school and get his back. i-- kids back.

i think it is not that easy. we need a local approach to reopening schools. what does the cases and spread look like in a local community? do we continue to apply these out of school measures to continue to educate people? do we keep doing online or in places where there is not much spread and we have cases controlled and can use things like contact tracing, can we put kids end adults back in the classroom? i think it requires -- and adults back into the classroom? i think it requires a different approach. tom: this is an ancient united states thing. the issue of states rights versus federal rights on education is a rail across the united states. believe johns hopkins we should find the needed funds now that will be utilized in all of eight weeks? lauren: education funds have to be an priority -- an absolute

priority. penalizing places because they reopen schools in a different way or because they cannot physically reopen the doors to their schools is a crime. we have to prioritize, especially the children who -- they have to be back in the classroom and we have to look ways that we can do it safely. everyone wants kids to be back, everyone wants kids to be in an educational setting but it has to be done safely. if it is done unsafely, we will be back where we started. tom: what should older teachers do? in new york, lost faculty members at schools, public and private schools as well. do they just not show up to teach this year? lauren: yeah. i mean older teachers, teachers at hires risk -- teachers at higher risks have to have an assessment done with their

physician, with their personal physician. they have to take into account their personal risk and familial risk. they have to make a decision for what is safe for them. i should not be penalized because they could not safely reenter a setting where we don't really understanding the risks yet. because we don't fully understand the picture of covid in kids, we cannot say to a teacher who is older or higher risk, you're safe, you're fine, go back to school. we have to find other ways those people can support the educational system, even if it means making curriculum online, making resources for other teachers who can be back in the classroom. there are ways to continue to engage teachers who cannot safely get back into the classroom. francine: when will we understand better, how this is transmitted through children? in the u.k., many if not all schools reopen for certain classes. there is a relief that it is difficult for a smaller child to

transmitted to another small child. when are we sure that is the case, if it is? lauren: i think we will see that this year, as we do reopening. we have to be careful to understand what is happening in kids. that means testing kids even when they are a symptom at a, taking kids to the doctors appointment, paying attention to mild symptoms in kids, and getting kids their flu shots and other vaccines on schedule in particular so that we understand this is covid versus something else. and getting kids tested when they have the mildest symptoms. that is wha -- that is how we will understand. francine: have we become better at treating covid-19 at home or in hospitals? the number of infections arising but deaths are not necessarily rising by as much. is it lagging or are we better at it? lauren: we hope that we are getting better at it. i think a lot of the evidence to

guests we are getting better at it, getting better at understanding the process and how it affects people, and how we can move them out of the hospital quicker. i think deaths are lagging. we know that to be the case. cases, deaths lag behind and that makes sense in general. places where we are seeing a huge increase in cases but not deaths does not necessarily mean the deaths will not come, unfortunately. francine: lauren sauer's, thank you for joining us -- lauren, thank you for joining us -- lauren sauer, thank you for joining us. coming up, today on balance of power, governor lamont at 12:00 p.m. in new york. this is bloomberg. ♪

>> this is "bloomberg surveillance." let's get the bloomberg business flash. shares of hsbc are falling. president trump learned advisors

are punishing banks in hong kong by destabilizing the currency to the dollar. the bank was mentioned as a potential target after it endorsed the new security law beijing imposed on the city. barclays is inform -- is looking for a replacement for their ceo. the bank has reached out to potential candidates in recent months. a bank spokesman says there is no search underway. president trump is considering a ban on the short video app tictoc in the u.s.. that would be one possible way to retaliate against china in its handling of the coronavirus. tictoc's parent is based in china. francine? francine: thank you so much. the british president has tested positive for covid-19 following months of downplaying the severity of the virus. latin america and the caribbean have become a global hotspot the

coronavirus, accounting for 50% of the covid-19 cases. joining us now is bloomberg's managing a tutor of emerging markets. justin, great to speak to you. will this change policy in brazil? will the extent of coronavirus infections change policy? probably not. will bolsonaro's case change policy? again probably not. one of the concerns here is that it may divert the bait -- the debate away from the more serious and urgent issue that needs to be addressed, economic issue. tension toward his own personal accounts, you could imagine press conferences, there will be questions about how he is feeling rather than the more pressing question they say that would be more relevant at this time. francine: what does it mean for

his opposition? if president bolsonaro continues to defend his virus approach, even having contracted the virus himself, does it mean he will lose significant points in popularity, or is it not the issue right now because the big issue is the economy? lauren: it's a good question -- >> it's a good question. there will be pockets of people to sympathize but they will be a large number of people on the that field -- about his condition. the president famously described it as a fluke, not some months ago. -- flu not some months ago. theother issue here is political debates in brazil have become so toxic as of late. he is a very divisive figure, causes politics to be very polarized. now, you have a situation where

people are more divided than ever. there was a headline that is one of the leading newspapers in brazil -- headline in one of the leading newspapers in brazil i'm an op-ed, saying why cheering for bolsonaro to die. that is a pretty extreme headline in the newspaper. you the level of toxicity reached. francine: politics are increasingly polarized in brazil. it only trails the u.s. with more than 65,000 confirmed deaths and over 1.6 million total cases. how bad will it still get before something happens? can the economy, even if there is no lockdown because the response has been erratic, can the economy survive the number of people infected? >> i think it can. that is not to be little the number of cases and graphs.

graphs are going in the wrong direction in brazil. maybe they have tailed off in terms of infection in the past week or so, but nothing meaningful yet. can brazil survive economically? the structure of brazil is such that there is a lot of invisible economic activity going on. people just have to go out to work, can't observe social distancing rules that people can in more developed countries. people have to go out, so that level of activity will keep a --tain amount of activity amount of -- the more question is when does the visible economy come back into the picture? there are signs in recent days that things are picking up. not just in brazil but other

places like mexico. it is actually to say the least, and there is no real position that provides comfort to make a useful prediction about future. francine: thank you so much for joining us, justin carrigan. this is what the markets are looking at. they are worried about consumer spending lag during the pandemic, and we are looking at the tensions between washington and beijing. be sure to stay with bloomberg for more "bloomberg the coverage and of the economic stimulus speech later. ♪

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is the sugar high. it doesn't tell anything about the medium-term trajectory for economies. >> we know there are large swathes of the price data being made up, literally made up. >> it's got to be the real economy that performs. otherwise, none of these companies will be able to make it through to 2020. >> this is "bloomberg surveillance," with tom keene, jonathan ferro, and lisa abramowicz. jonathan: for our audience worldwide, good morning. this is "bloomberg surveillance ." we are live on bloomberg tv and radio. alongside tom keene, together with lisa abramowicz, i'm jonathan ferro. in 30 minutes we will hear from the british chancellor, and this is significant whether you are inside or outside of the u.k.. it will display continued commitment by fiscal authorities to support this economy, and shifta subtle hint of the in policy as we go from shut down to reopen. tom: there's st