Transcripts For BLOOMBERG Bloomberg Markets European Open 20

Nonfarm payrolls surprised to the upside but continuing jobless claims show maybe market weakness persists. However, asian stocks are higher. U. S. Equities of course will not trade on this fourth of july holiday. Today is the third of july but this is the holiday, the bank holiday, as you would say, for tomorrows Independence Day celebration. And case closed. Thean lawmakers end nations illegal standoff with the bank voting to accept that the qe measures taken were proportionate. Western one hour away now from the start of cash equity trading in europe. Lets take a look at how futures are shaping up. We had a mixed picture earlier. Now, we are looking at green arrows for the most part in terms of european futures. Actually, very Little Movement there. And if you look at a broader board, you would see a more andrse picture with cac ibex 35 futures down but also not by very much. Still sort of searching for direction. Lets get the berlin burger the bloomberg first word news. Top stories from the bloomberg terminal. Nearly 5 million new jobs were added in the u. S. In june, and President Donald Trump says this shows the economy is roaring back. Joe biden is less optimistic. He says it is all good and people are getting back to work. The high jobless rate is no victory to be celebrated. He says the u. S. Is still in a deep hole. Act responsibly. That will be the message from Prime Minister Boris Johnson today when he speaks at a press conference. This comes as pubs prepare to reopen the after months closed across the country. Johnson says the u. K. Is not out of the woods yet and he is prepared to shut parts of the economy again if coronavirus cases surge. German lawmakers have ended a legal standoff over the European Central banks bond buying program. Backad alliance voted to the program, cns keeter propping up the euro area economy. The dispute was sparked by germanys top court, which ruled the purchases could be illegal but kicked the matter down to the parliament. This vote means the bundesbank can continue to participate in the ecbs program. 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. We have seen a bit of a mixed picture in terms of European Equity Index Futures as india promises to reopen restaurants, pubs, and hotels after months of virus restrictions, and after american nonfarm payrolls surprised to the upside with an upward revision as well. Lets get into the markets right now with laura cooper, our bloomberg mliv macro strategist. Laura, what do you think is going to drive markets today more the positive positive data out of the u. S. Economy yesterday . Laura that is the question, what can drive markets today . It is going to be a potentially sleepy day because it is quite a quiet calendar. We have this was from the stronger payrolls. It is wearing off. Futures on this list. We do have a handful of pmis. Crucially, i think it gives the market a pause before we head into volatility next week and certainly, we are going to want to see kind of how these lockdowns unfold, and crucially, how the virus case count unfolds, notably in the u. S. As well. The economicook at surprise index and hillary has put together a great chart, 1123, for those of you with a terminal at home that want to play along. The economic surprises have been fantastic in the u. S. News, whichonavirus is certainly bad for humanity, not matter as much to markets these days . Laura i do not think that is the case because i think when we look at what is happening with the data and the economic surprised index in particular. Its important to keep in mind we are coming up extremely depressed levels so any kind of upside surprise is going to move the needle in there. Ultimately, what that does not capture is just the long uneven path to recovery ahead and i think that is in part determined by the path of the virus and how containment efforts unfold and that remains to be seen, so i think really, at this stage, it is more of a case of just caution that is warranted so markets that are currently being propped up by monetary support, fiscal support, and signs of this economic recovery, ultimately, if they do see the virus take a different path and more is needed on those fronts, ultimately, that will determine how markets react going forward. From these extremely depressed lows. Laura, you are, i sense, north american, but of course, living in london. Do you have a list of the pubs that you are going to trawl tomorrow . Laura i am certainly looking forward to going back to my locals tomorrow. At this point, there does warrant a degree of caution just given the fact that there is potentially positive news that we are seeing signs of recovery. If we look back to highfrequency indicators when nonessential shops reopened in the u. K. Back in mid june, we actually did see kind of the initial euphoric bounce. Activity gauges are studying since then and if we look at other countries like germany and major cities they are like hamburg and berlin, it was a similar scenario when we look at for example restaurants, reservation data. Initial excitement. And we are seeing indicators weighing there. It doesly, we are just capture how far we are from those prepandemic levels and any kind of initial enthusiasm is likely to give way to this long recovery ahead going forward. Thanks very much for joining us. Have a great time on Super Saturday tomorrow. Laura cooper, bloomberg mliv. Acro strategist coming to us when can Central Banks reduce stimulus is the question of the day on the mliv blog. Andrew bailey has already talked about it on bloomberg. You can reach out to us with your contribution. When can Central Banks reduce stimulation in order to do that . Type ib tv on your bloomberg terminals. Up next, American Cities tighten their coronavirus restrictions but the job market shows signs of recovery. Whether the ongoing recovery has legs with the head of Investment Strategy. This is bloomberg. Pres. Trump the United States economy added almost 5 million jobs in the month of june, shattering all expectations. And ittacular number helps the overall situation enormously. On a standalone basis, this is a very strong employment report. Is ae jobs coming back reasonable expectation give in what is happening on the ground with progression of the virus. The numbers looked impressive. They are really stimulus driven. Underscores really how rapid things change in a covid tainted economy, even though we did get a really important upside surprise today. It is way too early to declare a victory. Investors reacting to u. S. Payrolls for june which beat consensus by 4. 8 million. There was also an upward revision to the previous months number. The jobless rate fell for a second month to 11. 1 . Marketsained as the assess the prospects for an economic rebound even as u. S. Cities tighten restrictions in hopes of preventing a second wave of the coronavirus. We are joined now by Frederick Carrie a, head of Investment Strategy at rbc Wealth Management. We were talking about all of the positive economic surprises we have seen out of the u. S. I realize it comes from an incredibly low point. Expectations were cut drastically as well, but how does the u. S. Economy the you . Mic recovery look to the numbers were strong yesterday but if you dig into it a little bit, toward the end of the month, you could see that drop numbers plateaued in the big question is whether the trends will continue, and clearly, whether the second wave of infections will really take hold, whether the measures that some politicians are taking in terms of rolling back the reopening of the economy, whether that will work, whether consumers and companies are adjusting their behaviors so we know that it is going to be effective enough. It is a big unknown. Do you see as the virus, thehe rising rising spread of the virus in the u. S. . in the u. S. . Affectingt seem to be markets terribly negatively. Frederique not at the moment. There is a strong expectation that there will be more and more stimulus for the economy but nevertheless, we think it showed a second wave of infections taking hold. We think it is clearly a bit of a worrying development and it could make things more difficult for the recovery, so we tell our investors to be more prudent, participate in markets, but to keep a little bit of powder dry, underweight global equities, slight underweight on equities for those reasons. We think markets are very optimistic about returning next year. Expect earnings to go back to precovid levels already next year. We think it might take longer. We continue to expect a recovery, which is going to be long and uneven. Then asat do you expect a result of all the Central Bank Bond buying programs, as a result of all the fiscal used byr thats being the u. S. And german governments as well as the u. K. . What is all this support going the two if not recovery going to go to if not the recovery . Frederique we expect better growth next year but we have a lot of questions from our clients and the one thing we are pondering is inflation, whether return ofhave a inflation to the medium and long term. Covid has a disinflationary impact. All the stimulus and Central Banks given that unlike last time, they are not structurally deleveraging, putting money in the system. They have fiscal stimulus and other forces so the repatriation of supply chain the diversification of supply chains, which is something that was already underway for covid. It was gaining even more momentum. Andges were quite expensive inflationary. Toer forces contributed keeping the inflation very low. That has mostly so given all this, we expect that over the medium term, inflation could start to increase slightly. Todont expect to turn 1990s level but we expect higher inflation. This, to invest even a scenario, is growth stocks. Inflation just as fixed income instruments. Let me finally ask you about the income inequality that we are being again in terms of recognition in the u. S. It has been with us all along and it has been an issue that people are discussing since before the financial crisis but it really peaked at that point. Now, its backed because poorer communities are disproportionately affected by the coronavirus and we see the richest man in the world getting even richer. Than 100 60ith more billion 170 billion. How does this affect markets if at all . 80 has to bewer at least a big Customer Base for corporate for Corporate America and for markets. Wererique disparities acute, as you point out. 10 years ago. They are increasing. It is something politicians will have to address. Otherwise, they might not have staying power for very long. We would now, but expect higher taxes. Dividends. That is when some of these will be used in order to try and reduce disparities. Matt you are going to stick with us. We will get more from you and i will delve specifically into your Investment Strategy. The head of Investment Strategy at rbc Wealth Management. We will talk a little bit about what is going on in europe and specifically in england, not of course a part of the European Union anymore, but still on the continental place. It is Super Saturday tomorrow and the brits are preparing to go back to pubs and restaurants, maybe even stay at a hotel if they have had a little bit too much and do not want to drive home. It is july 4 as well. We will discuss all of that and more, next. This is bloomberg. He is right. Everything is on the table. Many things are on the table. It is just a question of shaping it and doing it smart. I thought the original rescue package was very smart. I dont know if everything has to apply all over again. We will see. We assess the economy. That is the key point. That was white house adviser, Economic Advisor larry kudlow speaking to bloomberg about the next Coronavirus Relief package in the u. S. Theres a lot of hope for that certainly from consumers out already feeling the crisis very hard in terms of the cash shortage. Thats get the Bloomberg Business flash news for you now. These are the top corporate stories from the terminal. Boeing is pulling the plug on its 747 jumbo jet. It is ending production after a halfcentury run for that when ill plane. The decision has not been reported but sources tell us it can be worked out from the subtle wording changes in the companys financial statements. Despite their popularity with travelers, a personal favorite is the 747 800 and the final version of the 747 never really caught on commercially. Citigroup is unlikely to bring toe than 40 of workers back its offices until it Coronavirus Vaccine is available. The bank started to bring a small percentage of staff back but it has run into a consistent problem. Employees are hesitant to use subways or buses to get to work. The firm has around 200,000 employees globally and who wants to be shoved in a tight elevator with everybody else when they are snoozing . That is your Bloomberg Business flash. Tomorrow is Super Saturday in england. Pubs, restaurants, and hotels will reopen on july 4 after months of virus restrictions. Prime minister Boris Johnson is tons to actk bri responsibly today when he speaks at a press conference. He says he is prepared to shut parts of the economy again if the coronavirus cases surged. You better take full advantage is the message of tomorrow. Frederick carrie a, head of Investment Strategy at rbc Wealth Management is without. , thenow, it is exciting idea of the pubs finally being reopened. I cannot manage and imagine and england without pubs. Crisis has nots been handled particularly well there. Is the economy in the u. K. Faring worse than the economies on the continent . Frederique we think this year might be more difficult. We have not only covid crisis and indeed our confinement here also little bit later but very strict. We are opening the economy later than the continent but we also have the brexit uncertainty which is weighing on corporations. So we have two challenges in one year and we do expect the contraction in gdp to be mostly here instead of on the continent. That, negotiations on brexit are ongoing. Between 25 and 30 probability, hard brexit where we will fallout on unfavorable wto trade tariffs. It will be some time of year focusing on some temporary stop gaps to manage the situation, stop gaps on Certain Industries and sectors. Goods mostly, not on services. It is preoccupying the corporate sector. Hand, it has been so far very competent in terms of the emergency packages. We do expect more stimulus this summer. Cuts in taxes. Most likely tax cuts, something that was done in the great financial crisis. It was a very effective tool. The Infrastructure Program which has which had been announced before the crisis to be brought forward perhaps slightly. We had fiscal stimulus and the bank of england which is very much behind the economy. We would expect more stimulus in the autumn. And all that support. Do think u. K. Equities are largely underpriced. Which Industry Groups do you like in the u. K. . Frederique we have a slight underweight on u. K. Equities. There is some value of course. The health care sector. We like some industrials. We have secular Growth Opportunities and some consumer staples. For which the u. K. Is very well known. U. K. Andoldings in the participation in the domestic sector. Things like it. Difficult, but valuations are matt thank you so much for joining us today. Pleasure having you on bloomberg television. Frederique carrier is head of Investment Strategy at rbc Wealth Management. Up next, Emmanuel Macron pledges a nupathe for new path for france and more importantly, a new team to lead it. The cabinet refill full reshuffle, next. This is bloomberg. You doing okay . Yeah. This moving thing never gets any easier. Well, xfinity makes moving super easy. I can transfer my internet and tv service in about a minute. Wow, that is easy. Almost as easy as having those guys help you move. We are those guys. Thats you . The truck adds 10 pounds. In the arms. Okay. Transfer your Service Online in a few easy steps. Now thats simple, easy, awesome. Transfer your service in minutes, making moving with xfinity a breeze. Visit xfinity. Com moving today. Welcome back to Bloomberg Markets. This is the european open. 30 minutes away from the start of cash equity trading and it risk on. Pretty here are some things to watch out for. Cpi data from turkey. Yearberg expects year on inflation to accelerate to 12 in june. U. S. Markets are closed for the Independence Day holiday that is officially tomorrow but today is the bank holiday. Also, we are going to hear from s he speaks at a policy series event. As we have been reminding everybody a lot, tomorrow is Super Saturday in the u. K. Restaurants, bars, and other businesses will be opening up for the First Time Since the lockdown began. Back to the continent. Emmanuel macron says he will push through reforms. But indicated he was open to changes. Speaking to a group of french newspapers, he says the government would take a nupathe with a new team in the helm. He refused to be d