Good morning, everyone. This is bloomberg surveillance. Im Francine Lacqua in london. Lets look at the markets. The markets focusing on data out of france. Verye expecting pmis shortly but also focusing on the china deal after there was confusion on whether the deal with China Remains intact or not. First to the data that is just coming out. There was a bit of a surprise when it came to the french pmi above 50. Anything above 50 in this environment, remember, anything above 50 means expansion. Anything above 50 in this environment is really taken as encouraging news. Euro area june manufacturing pmi coming in at 46. 9, betterthanexpected. Services pmi much betterthanexpected. The figure we were expecting was 41 and it came at 47. The other things i am watching and thehis renminbi european stocks gaining 1. 3 . Lets get straight to the bloomberg first word news. Heres dani burger. U. S. Vice president mike pence is warning of more young people testing positive for coronavirus. He made the call on a call with the governors and those concerns echoed those of Texas Governor abbott. The state may hold a reverse economic reopening if the pandemic continues to spread at an unacceptable rate. In the u. K. , Prime MinisterBoris Johnson is set to announce the next steps for lifting the coronavirus lockdown. The move is expected to give the green light for cinemas and museums in england to open their doors on july 4. The Prime Minister will also announce if he is having the two meters social distancing wrote. China and russia are criticizing the u. S. For a stunt at yesterdays nuclear talks. Marshall billingsley tweeted china is a noshow alongside a noshow of a photo of chinese flags next to empty chairs. The chief armscontrol official responded it was an odd scene, adding, how low can you go . Russia also condemns the move. Saudi arabia will allow the year for to go on this a limited number of muslims already in the kingdom. Safety, hygiene, and social will be observed during the event. Many wait years to secure the visas and save up for the trip. Global news 24 hours a day, onair and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. I am dani burger. This is bloomberg. Francine we are getting some news out of wirecard. This is a story that has been gripping the market. The x chief executive officer, marcus brown, has been arrested. Yesterday, we were bringing news that there was a warrant against the acts wirecard chief executive. It is incredible the amount of news that has come out from wirecard in the last couple of days. There was an unwinding of marcus brauns large portion of shares which he had owed. There is a chase to find the money that does not seem to be there anymore. The former chief executive, who held 7 of wirecards shares to rank as the companys biggest shareholder, has funded that had funded his purchase through had funded his purchase through a loan. If you look at what wirecard has been doing this week, in the week it was down some 82 . Of course, there is somebody more questions at the moment that need to be answered so many more questions at the moment that need to be answered. Yesterday, we have the news that there was some talk about tying it up with Deutsche Bank at some point. The wirecard former ceo has been arrested. President donald trump has said the phase one trade deal with china is fully intact. That is after Peter Navarro sewed confusion that started with a conversation on fox news. Do you think that the president sort of i mean, he argosy really wanted to hang onto this trade deal as much as possible and wanted them to make good on the promise. There have been progress made. Given all that has happened and all the things you just listed, is that over . Its over. Yes. Francine u. S. Futures and the offshore yuan fell before navarro walked back his comments , saying it had been taken wildly out of context and the phase one agreement continues in place. ,e bring in Andrew MccafferyAsset Management at fidelity asset manager at fidelity. Andrew hello, francine. Yes, i think certainly its going to be some mobility around whether the deal could undermine confidence that has been developing. I think it highlights some of , howttempts around sustained is this progress we are seeing . Lockdowns are starting to be unwound, activity is picking up. And the hope is for that to carry through to something that is far more sustainable. Francine when you look at the conversation three or four weeks ago, it was whether markets and stocks in specific were running ahead of the real economy. But it seems the real economy is not doing too bad when you look at certain data points. Was the market right all along . Andrew some of the numbers you are reporting today for the pmis, as we are seeing around the world and in europe. There was a very strong level of intervention that managed to provide that sort of healing process in markets as we came to april. Thisthere, we have seen incredible liquidity that has been around the marketplace. Some of this recovery just at the moment as a rebound has elements of a mechanical degree of a bounce from how bad it has been. I have to say, it is encouraging to see how in europe is bouncing back, especially some of the more encouraging signs and sequential elements of recovery in china as well. I think that the markets are still feel may be a lot of that was to do with that liquidity surge. Tow, we are seeing at leas some sense of support. The reality is things we see, furtherund continuing from here, we are still going to have many elements around the economy and its ability at sustained recovery that will be coming out in the months ahead, especially when you look at unemployment, about what that means ultimately. We have to be careful. What comes next . That may be a little bit more uncertain than the Current Situation today. Francine what is priced in when you look at markets around the world . How much of a possible second wave or a partial lockdown of some economies is already priced in . Andrew im not sure it really is. I think at this stage, we have seen a lot of enthusiasm really looking at actually that a vshaped recovery could be possible. I think the confidence around that is growing. A lot of that depends on the degree of fiscal policy picking hasnd this time that it actually been sustained so we wont see that move to austerity very quickly. I think the elements that will take some time are what happens if we do see some degree of a second lockdown . I think whats more likely is the elements around how unemployment develops, how much income can be restored and sustained, and how it has affected those hardest hit, can they recover . That process will be many months in the making. The market i think will take stock of that. It is starting to, and summaries in some ways. Conference confidence that there will not be anything to hold back that growth and it really can become much more sustained of a recovery. Francine andrew, is there a danger that runaway inflation is all a sudden and inevitable consequence . Andrew thats a very good question. Actually, today, my colleagues had very much an updated conversation on where are we in the demand shock, inflationary issues we have seen playing out . It is about potentially future inflation. The reality is again, the risks are building. If fiscal policy continues to really be maintained, the degree to which we see the ongoing support carry through to the years ahead. We have those significant budget deficits being maintained, then there is a risk you could see that translate into, especially from Financial Assets into the real economy. I dont believe that it is sure yet. I think the particulars are starting to build. If they are, that will have a lot of implications about the potentially coming back would leak to some of the other issues about the strength of pmis, yield curves, and inflation pressure starting to become real. Francine andrew, thank you so much. Andrew mccaffery there from Fidelity International stays with us. Bloomberg investors hosting some of the biggest names in finance, politics, and cannot. Starting from 6 00 p. M. And economics. Started from 6 00 p. M. , we will be speaking to our guests. That is all coming up later today and this is bloomberg. Economics, finance, politics, this is bloomberg surveillance. Im Francine Lacqua in london. Lets get straight to the Bloomberg Business flash. Heres dani burger. Breaking news this morning, wirecards former ceo has been arrested, according to the munich prosecutor who issued the arrest warrant. They are accusing him of inflating sales volumes. It comes in the wake of an accounting scandal at wirecard. The company says 2 billion missing from its Balance Sheet probably does not exist. Apple plans to sell Mac Computers with inhouse processors. The move signals an end to a 15 Year Alliance with intel. The changed was announced at the Virtual Conference for software makers. It saw the most dramatic changes to the iphone home screen since the products release. It will allow users to place widgets that sit between the usual grid of apps. That is the Bloomberg Business flash. Francine thank you so much. Coronavirus remains a major global headwind. A number of new cases around the world has reached a record, fueled by a surge in latin america. Total infections have now topped 9 million. Contagion was the accelerating at an acceptable rate. Still with us, Andrew Mccaffery from Fidelity International. We were talking about the narrative around lockdowns and the economy. We even talked about inflation. Casesthe number of that are rising but also the possibility of targeted lockdowns, where do you see value right now in the market . Andrew i think there is a couple of ideas that maybe you more specifically mentioned. We will look around where you see markets that have underperformed, where you see that they are managing the issues around covid19 and , anomically relative as well place like singapore, where the market has underperformed. They are managing to maintain a high level of stability. I think it is relatively attractive within the region now. Somebly, we could see degree of relative bounceback. I think the other part is just touching on the inflation conversation, that if you have the ingredients to provide support into your, and i think one of the things that really impressed me recently is the degree to which we are very used to it being the ecb supporting europe. Europe has been sadly disappointed by the fiscal moves. Actually, they have managed to exceed what has been expected. Youre starting to see that start to flow through. Again, there is an element where i think we will have a quite volatile period for some of the sectors, like value, the cyclical ideas other. You could find that they are getting some traction. That reflects on someone like europe somewhere like europe being relatively better. Francine andrew, what do you do with fixed income at the moment . I know there is a search for yield, but will that change from your end . End willave year we . Better value for treasuries but also bonds . On centraldepends banks Balance Sheets on the willingness to use that aggressively and also other tools, whether it be buying directly or the talk around yield curve control. It makes one a little hesitant. If we see it followthrough in we have seen reflected at the moment in the recovery, you could see that yields will see gravitation higher. Where i think you are still seeing some value and the risk is now looking beyond the crowded trades. Because we had so much money really flow towards the corporate markets, and especially into the investmentgrade sectors after the infection. Looking around elsewhere, there are pockets of highyield both into europe and also in asia, where you are getting i think very good returns. Interesting enough that looking to china, even though it seems to be more of a the central bank with recent declines. Yields there are likely to be more supported well supported. It would be an area again where we think globally and the amount of issuance taking place that china could be relatively better looking through to next year and beyond. Francine andrew, i know we talked a little bit about europe. We touched on this trade war between the u. S. And china, but how much of a game changer will the u. S. Election be . Of course, it depends on who wins. Andrew yes. I think it is very important. Again, i think one of the things that will be interesting to observe about markets as we move through into the late summer because they tend to be pretty good at giving signals around who will win and what that could mean. At the moment, just seeing how , it doesveloped suggest that democrats have managed to get some attraction. The key thing is to secure the house as well as the presidency, but also the senate. You know, lead to, fairly significant change. I think joe biden is not aecessarily going to be in policy sense as extreme as we may have seen from other candidates. I think there will be some unraveling of the trump policy position. I think markets will start to think about that much more as we go through into that later time before, depending on how far democrats build up their lead. Francine andrew, what is the market thinking about right now . Do you think it is a bit omnidirectional . Cannon only focus on one thing at a time can it only focus on one thing at a time . Yes, francine, it has such incredible in terms of the speed of move. It is almost as if the playbook was there waiting to go. Send everything out. One of the narratives has been, dont fight that liquidity. This is now at levels that will flowing through and have impact. There is certainly an undercurrent there. This very long term underperformance may be seeing signs of change. , think still the cross current and as you saw with the over not trading, overnight what does that mean . I think that the challenge is that we are going to see these narratives actually competing in the shorterterm. The markets are not going to be constructive as we look to the next few weeks. Forces,uting fours, competing forces . Hat is that mean week to week week . S that mean week to francine andrew, what do you do with the gold in this kind of environment . Andrew gold, i think ive said to you before that its very phase over a medium term basis while you have had this clear move and attempt to ensure that pushed into negative territory. If you see any challenge to that , that would have being brought back into gold. I think position was, there has been an embracing of this exposure. The risk is that its diversified qualities will not be quite as significant as they have been. Again, good reason to be thinking about. I think certainly one way you look if you believe the dollar ofally start to show signs weakening on a more pronounced basis. Francine thank you so much. Andrew mccaffery there, global chief investment manager global chief investment manager Asset Management. N hasard ceo marcus brau been arrested. It comes in the wake of a growing scandal after a missing 1. 9 million billion euros. A judge will decide today how long braun will be held. Let me tell you what we know so far. Over emails from the german prosecutor, we have learned that they have issued an arrest and he for markus braun turned himself in late monday. The charges that he faces is potential cooperation with offenders of sales manipulation to make wirecard look more attractive to investors. Look, this has been a wild ride wirecard. You only need look at the share days. Over the last five this scandal, although it has been reported in suspicion in the sp, the company on thursday says it is unable to release its Earnings Report due to money that it is unable to find, about 2 billion euros worth. Thats when we see the stock plunge. The issue gets more complicated on friday, when they say that money likely never existed. One of the issues wirecard is continuing to face is whether or not they will be able to get an extension of their loans from banks because they missed their earnings release. The banks say in order for them to get an extension and for the loans not to be called, they need to issue more clarity. There is some hope that they might open this investigation up to a third party, perhaps give more detail. Until then, it looks at the investigation might be going even further with the ceo, former ceo, rather, not arrested. Francine thank you so much. With Boris Johnson expected to give the green light percent of and museums to reopen, how should the u. K. Kickstarter its ailing economy . Andlso look at the markets what happened overnight as the debate over what exactly the u. S. Trade deal will look like. All eyes on what happened with the wirecard chief executive. Dani burger was just telling us, the exchief executive being arrested. This is bloomberg. You say that customers make their own rules. Lets talk data. Only Xfinity Mobile lets you switch up your wireless data whenever. I accept 5g everybodys talking about it. How do i get it . Everyone gets 5g with our new data options at no extra cost. Thats good. Next item corner offices for everyone. Just have to make more corners in this building. Chad . Your wireless your rules. Only with Xfinity Mobile. Now thats simple easy awesome. Switch and save up to 400 a year on your wireless bill. Plus get 200 off a new Samsung Galaxy s20 ultra. Economics, finance, politics, this is bloomberg surveillance. Im Francine Lacqua in london. Lets get straight to the bloomberg first word news. Here is dani burger. President donald trump says the deal phase one trade deal with china is fully intact. That follows confusion overnight after comments from his trade advisor. Peter navarro spoke to fox news, indicating the deal was over. He quickly walked back the comments, saying they had nothing to do with the phase i deal and were taken out of context. The European Union and china sparred yesterday as the two sides held a highlevel videoconference. Tensions have grown since the last summit 14 month ago. The blocs leaders criticized chinas plans to curb hong kongs autonomy. Singapore is calling on election with the coronavirus pandemic set to be the defining issue. The city state has more than 42,000 confirmed cases. Last week, relaxing its restrictions even further. With his tradedependent economy, the nations continuing to feel the heat. The Prime Minister will seek a new mandate to govern during the pandemic fallout. Global news 24 hours a day, onair and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. I am dani burger. This is bloomberg. Francine . Francine we are just getting some news out of the u. K. This is data for the month of june. Manufacturing pmi, 50. 1 instead of the 45 that was forecast. Anything above 50 is a contraction. A couple of economists are debating whether at this point, because the lockdown ended or the first phase ended, we should have numbers that are above 50 overall. Whatever your thoughts on that, it is better than forecast. Pmis for the month of june, services pmi, 47 instead of a 40. 1. 2503. Boris johnson expected to give the green light to the reopening of cinemas and theaters later today. Two former chancellors have also been weighing in on how to boost growth. Is calling for infrastructure to even out any copies. Another says a cut to vat will lose consumer spending. Joining us now is mike bell. A lot of things going on with her the u. K. Also, with the bank of england and what we heard from governor bailey. What is your take on u. K. Assets right now . Mike for me, the key concern in is aroundt the moment the furlough skin. It needs scheme. It needs to be kept in place until it is safe for people to go back to a more normal environment and jobs are able to come back into those sectors. Winding back the furlough scheme risks somes complete of those people currently on furlough ending up unemployed. For me thats the key at the moment. Francine do you see any value in certain assets . I dont know whether the u. K. , because it is also going through brexit, if you look at pound, it will be quite volatile. U. K. If you look at the relative to other markets, there is more bad news already priced in in the u. K. If you look at end of 2021 earnings, they are expected to be about 17 lower than earnings were at the beginning of this year. If you contrast that with the u. S. , where earnings are expected to basically get back by the end of next year to where they were at the beginning of this year, it is clear that the market is pricing in more bad news in the u. K. Than it is in the u. S. That gives me some comfort that perhaps there is less downside in u. K. Stocks than there might be in other markets and other sectors. Concernrtheless, its a around the furlough scheme being potentially wound down too soon. Francine mike, when you look at what is moving the markets, it is definitely this confusion about whether we will see a trade deal between the u. S. And china. How much of a risk is that to the Global Economy and to markets . Yes, you know, were you to see abs collation in tensions between the u. S. And china, then i think that would pose a risk to the stock markets. More interesting at the moment is that you are seeing some names do very well this year and some names which might be quite exposed to escalation in those tensions. It is definitely a concern that markets are going to have to monitor. Francine where do you see the most value . If you look around the world at markets globally, would you want to buy right now what do you want to buy right now . Mike there is some value still in things like energy stocks. I also think if you look at certain parts of the financial universe. You have to be selective but i think you can buy some of the financials. In energyome value and financials, where i think the market is perhaps complacent is looking at the sectors which are beneficiaries of the stayathome world. You look at some of the Online Retailers, maybe some of the online advertisement. Take the Online Retail sector, it is up 40 year to date. It is important for investors to know that even though the s p 500 is a sickly back to where it was at the start of the year, within that, this market looks very different. You have some sectors which are up 40 . They could be more vulnerable. Vulnerable were we to see another lockdown. Francine thank you for joining us. Michael bell, Global Market strategist at j. P. Morgan Asset Management. Expects a vshaped recovery in the next few months. Here he is. I also see a big v in terms of the economy going up for the next few months, because it has been closed. As people are allowed to go back, the economy will really respond a lot. But there is only so much the economy that is highly complex can respond. Things gose not all takeually and it will ch up a while before we syn and get back to 2019 levels. When i think about your experience, i know that blackstone is a place where you are always looking at opportunities and new opportunities in many ways. I think back to the turnofthecentury and the big bet and a lot of investing you made in real estate. I think about the last financial crisis and how heavily you invested into credit and throug jso and other means. What is something you are doing right now . Take us through blackstone to help us understand the opportunities that might exist in this latest crisis. This one is different. They are always different. The easy things to have been doing was, you know, when you hit that bottom, even if you did not know it was the bottom, to be making significant investments. We reported just at the end of the First Quarter that we had 11 billion in effect like with securities. That is that of course had a very happy outcome. We did more in addition to that. That is sort of the first stage. I think each of our businesses are now seeing interesting opportunities. And, you know, as technology is changing things and people are staying home more, the areas where you would want to invest or whether it is technology or are being modified. Certain order economies that are bound to be disrupted, those types of companies are places where unless you have a really remarkable management you want to stay away from. We can see different parts of the economy opening faster. Some things were closed completely. Interestingly, in the hotel business, we own one hotel in las vegas, completely closed the first completely closed. The first weekend it opened, it was 45 filled. That is an astonishing thing because las vegas was barely open. There will be some surprises. Not all hotels. As you look at the gradation of wills where you can drive recover much faster. Places where you have to fly will recover much lower. If you have to fly over slower. If you have to fly over oceans, those will be the slowest recovery type of investment. So each of our businesses is starting to really put out money. Our business lines. There is a much better tone. To do a lot a private investing, there has to be some confidence on both sides and sellers have to believe they are getting fair value and the people who are buying think they are getting fair value so there is an overlap. Typically, what happens, as you know, jason, if you are doing private investing, so others dont like to sell at bottoms sellers dont like to sell at bottoms. You can buy liquid securities, cmbs andurities of other things that are stacks where you can find the security where you think it has the most upside, even if it has gone up halfway from where it started. Some of these will continue to go up and others have already returned to par. It is an issue of figuring out which of the underlying businesses are going to return to health. Francine that was a steve schwarzman, the blackstone chief executive officer, speaking to jason kelly. We will speak to the blackrock vice chair. Dont miss that conversation at 10 00 a. M. U. K. Time. This is bloomberg. Francine this is bloomberg surveillance. Im Francine Lacqua in london. Lets focus on italys reopening. Early junelast hour, pmi data shows the euro area is continuing to pick up from its strong contraction. How can europe make sure its economy rebounds . Convince tourists to visit . Raffaeleus is tormbetta, ambassador in the u. K. Good morning, francine. First of all, we are open. Travele third of june, is coming from the u. K. As well. S from European Countries we are respecting all the safety measures. So when we invite people to come to italy, we are saying to them, you can enjoy what you have always enjoyed coming to italy, you know, the beauty of italy, the artistic side, museums are open, the opera houses are open. At the same time, we want to make sure that you do that in a safe environment. We will monitor the situation on a daily basis in full cooperation with the italian region. We will monitor the transmission of the virus. We will monitor the impact that covid19 has on the health ofvices, so the ratio positive cases to the population, and also the receivers of the Health Services in case there is a resurgence of the pandemic. The data that now we have had for the last few weeks all from this point of view is encouraging. Francine ambassador, i understand that it is very important to actually reopen and reopen something safely. A lot of International Tourists will have concerns about that. What about the quarantine . Are you discussing with the Foreign Office to make sure that u. K. Taurus in italy do not need to quarantine when they come back in the u. K. . We already, as i say, we already opened. It is now up to the u. K. Government to decide. We think we have all the conditions for the british people when they come to italy to feel safe. If and hopeful that, when, of course, the quarantine is ,s in the u. K. Those elements will be taken into consideration. People traveling to italy can go back to the u. K. Without needing, you know, to be in quarantine for 14 days. These are allt the conditions for this to happen. Francine what a better way have ould a better way have been to decide which areas of italy were to be reopened . Would have been safer for tourists . No, because as i say, of course there has been areas of italy, especially in the north, where the outbreak, they were most heavily affected by it. Even those regions, those areas now have got numbers, have got a situation that makes us feel that it is under control. As i say, we will be monitoring and we are. We will be monitoring region by region. At the moment, he can go anywhere in italy you can go anywhere in italy. Thatsaid, you are assured this is monitored in case there is any need to change the decisions. Francine ambassador, when are you expecting travel from the u. K. To italy to be a bit more normal . So extra roots also for airlines. I dont know if there are any promotions going on. Difficult thatw will be and how much Domestic Tourism will happen in italy. Course there is a large part of Domestic Tourism, especially under the current circumstances. Is urism from the u. K. Has historically been one of the main assets for the italian industry, tourist industry. Last year, there were about 6 million trips from the u. K. So we want to attract them. Se understand that it is not a easy as it used to be. Italia well, era air italia has never stopped working. They are increasing the number of flights and number of destinations. I know that also other airlines are doing the same. We do hope that gradually, we will go back to where we were. As i say, you can go anywhere in italy. You can feel assured that it is safe. You can go to restaurants, museums, of course, respecting the one meter of social distancing, Wearing Masks in enclosed spaces. But traveling freely from one part of italy to the other. So as i say, you know, its a situation that we will monitor. We allowe moment, people to travel freely to end in italy. Francine what is your take on brexit . We are facing a deadline. We understand the u. K. At the moment does not want an extension. Is there a worry that firms and people are even less prepared for brexit because they are dealing with covid19 so they dont have the right paperwork in place, they have not applied for settled status . Yes, of course, no. The u. K. Government is asking for an extension of the transition period. As you know, the European Union to do. We are, of course, interested in a good deal between the eu and the u. K. The u. K. Is an important partner for the u. K. , italy, and further European Union for the European Union. What is the impact on covert net of covid19 on this . It is difficult to understand. What we can do is to make sure that those 4 months that we have now between now and october when the deal is to be finalized so that there is enough time, so we as ouruse these months best and make sure we have a good deal for citizens, companies, a good deal for both parties, the eu and u. K. Italy is going to support that. We will fully support the eu commission, the chief negotiator in a way that in the end the final result is a good one. Francine ambassador, thank you so much for joining us. He is the italian ambassador to the u. K. We are getting a bit of news out of singapore. We found out that they would hold early elections. We now understand that singapore is Holding Elections on july 10. That is about two weeks and a bit away. We will have a roundup of todays news, including the election news on singapore. This is bloomberg. Economics, finance, politics, this is bloomberg surveillance. Im Francine Lacqua in london. Lets get straight to the Bloomberg Business flash. Here is dani burger. Hasirecards former ceo been arrested, according to the prosecutor who issued the arrest warrant. They are accusing him of inflating sales volumes. It comes in the wake of an accounting scandal at wirecard. The company says 2 billion missing from its Balance Sheet probably does not exist. Softbank is selling part of its stake in tmobile in a 21 billion deal. The sale is part of a broader push by the conglomerate to unload assets in order to finance buybacks and pay down debt. The company is dealing with steep losses in its vision fund. That is the Bloomberg Business flash. Francine . Francine bloomberg surveillance continues in the next hour. Tom keene joins me. We will be having a conversation with someone from blackrock, talk about pmi figures, the role of central bank sent we runaway inflation banks and possibly runaway inflation. Singapore holding an election on july 10. This is bluebird. Bloomberg. Francine President Trump insist that the phase one trade agreement with china is still intact. Peter navarro says the comments were taken out of context after saying to adjudge the deal is over. Will announce that the two meter rule could become the one meter rule today. And new global coronavirus cases reaches a record in latin and the Texas Governor says contagion is accelerating at an unacceptable rate. Good morning. This is bloomberg surveillance. The markets have really moved on the back of these china comments from Peter Navarro. And theres confusion about whether the trade deal is and a lot of the data points in france and europe points to better than recovery. Tom there a