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 drawn on whether he would replace Prime Minister edouard philippe. Our bloomberg reporter joins us with more. Thiss mccrone pursuing reshuffle and why now . Macron . Ne to reinvente had himself after the pandemic. Pandemic, there were the yellow vests protests. He wants to be a fresh start to the second part of his presidency. The elections are approaching in 2022. Sunday, he suffered a major blow already in the major elections across the country. The question is will he change his Prime Minister . Citytually won his local so he could become mayor again. 65 of the french would like him to remain Prime Minister. That is an issue. Unpopularity remains below 40 . Macron has to decide whether it is better to keep him close rather than having him as a possible competitor. To replace him could include a couple of women including the German Defense minister. In termsrmer head finance minister is expected to stay. After three years of policies considered to right wing, Emmanuel Macron to respond to add more wave and social to his policies. Later today, we are expecting job cuts from air france. What kind of figures are we talking about . Many as 7600 jobs including at least 400 pilots due to the pandemic. The travel restrictions that follow. The plans are expected to be presented to unions today. The ceo hopefully can make the most of this with early retirement. Or redundancy. Numberready received a of 7 billion euros. Y in france have become have stopped becoming profitable. With the extension of the eu ban, that is not going to help either. The transport secretary said yesterday many roots will have to be checked including in france. 1000 jobs. Weekber, airbus said this the recovery of the market officially is not going to happen for another three or five years. Clearly, air france will have to make some changes. Thank you so much for joining us. Talking to us about this expected reshuffle in the french cabinet and the expected restructuring of air france. The founder of the worlds Biggest Hedge Fund said recent actions mean Capital Markets are no longer free. Today, the economy and the markets are driven by the Central Banks. And the central government. The i mean by that is purchases right now of financial orets by the Federal Reserve of government securities. They are the drivers of that market. The production of the money, if you look at money and who is in the market. The Federal Reserve for example will set an Interest Rate for different types of creditors based on its economic objective. The 2008d days, financial crisis, we needed to protect banks because they were systemically important. And then money market funds. Now it is much broader. The whole economy is systematically important. If they did not make lending to companies, including what we justfallen angels, those above investment grade, we would lose large portions of our economy. Where in a situation now they are the market makers. Take the Central Banks out and you have a different story, including the value of money. Think about it in europe. The central bank will lend to banks at 1 . That means you do not have interest payments. You have interest credits. The Central Banks will take that debt in. Agenda,e a political not an economic agenda. They will determine whether they will be paid back or when they want to be paid back, based on how the economy is doing. In that case, like the example they will make loans that will have entrance credits. Lets say, zero, you do not have to pay the interest back. It depends on the condition at the time. Those are markets driven by Central Banks, not only their actions but their desire to be an owner of the assets. Their priorities about that ownership when they buy and the when they sell are not the same as the classic free market allocations. As a result, the Capital Markets are not free markets. One of the questions investors are wrestling with is how far Central Banks are willing to go in their effort to reflate Financial Assets to begin with. They hope transmit something through to the real economy that would result in growth and jobs. How far are Central Banks willing to go with this power they have discovered they have . Central banks are willing to go and need to go as far as it keep theorder to system afloat. Because we are in this late stages, we have a lot of debt. You are going to see Central Bank Balance sheets explode. Choiceve to because the is the sinking ship. Bridgewater ceo talking to Erik Schatzker. Prepares to reopen pubs as well as restaurants and hotels on the fourth of july, after months of virus restrictions. We will discuss where to go next. This is bloomberg. Welcome back to Bloomberg Markets this is the european open. 18 minutes from the start of cash trade. This is your bloomberg first word. Tighteningu. S. , rules. Masksis making face compulsory. Disease expert Anthony Fauci is warning the disease may be mutating. China sanctions bill has passed in congress. It heads to donald trump for approval. The legislation would impose sanctions on officials who crackdown on dissent in hong kong. The house and senate moved quickly to pass this legislation. Maxwell has been arrested, accused of helping Jeffrey Epstein abuse girls. Maxwell was his close associate for years but she has long denied involvement in any of his offenses. She helped him identify and groom victims. Global news, 24 hours a day. Poweredberg quicktake, by more than 2700 journalists and analysts. England preparing to reopen pubs, restaurants, and hotels tomorrow. It has been billed as Super Saturday. Another stage after months of restrictions. The government and businesses are counting on the economy getting a big boost on the path to recovery. U. K. E joined by the ceo of recovery. Hospitality. It seems like tomorrow is going to be a massive event. Probably during a time when you dont really want massive events. What do you expect . We know there is a great degree of caution out there. Is so are pubs and hotels can welcome members back. Our latest survey suggests just over half of businesses will reopen and 90 of consumers are looking to come back on that first day. It will be manageable. We are expecting a gradual phase reopening. Do youere there think you will see a lot of people . You will see quite a few people. Premises arelocal going to do the most. Going out into a neighborhood area. We will try to do that, make people can keep enjoying going back out. Socializing. In a distance way. Of bankruptcies have you seen so far in terms of pub restaurants around the u. K. . What do you expect in terms of that trend . Will it be worse in terms of q3 . We are going to see some accelerating. We saw some names over the last quarter. Will see them in jobs and sites, rather than closing altogether. We have government support. Also, much needed cash flow. We will see that accelerate. We will anticipate a surge of venues reopening. There will be significant job around a up million jobs. At the moment, tomorrow, which is hugely good news. We need to sustain the business, keep them employed. Where they are only able to work part time. Talked to tim martin. He has never been concerned about brexit. Sell more lots vatza than anything else. What are your constituents concerned about when it comes to brexit . They are concerned about the s coming in from europe. They are concerned about delays in the border. It is about food price inflation. Restrictions on products coming in. Previously, the big concern had been about the labor market. In the situation with covid, the pressures on labor have eased. Postbrexit, we need to make sure we can get products and people in as we need it. Is ourerism thirdlargest export earner. It will not be fully activated in 2020. It makes us realize how reliant we are in people coming into our country to spend. You run u. K. Hospitality is the u. K. Trade association. The london chair of Nighttime Commission. What is this . A commission overseeing discos and clubs . What are you doing now . The Nighttime Commission was set up i was proud to be able identifyit, helping how best we can support the nighttime economy. London, people that work in the city. Look at policies that would be helpful to make the city available. We made recommendations at the beginning of last year. We are working through how that can be implemented. Identifying pubs, bars, restaurants, how important they are to the city of london. That is critical because they remain closed. We need to get the rest open. Get the cultural life of our capital city, back at the top. Are clubs really hurting in the u. K. . I know at least in one, whats going on in the u. K. . Clubs the nightclub scene grassroots innovation. It helps [inaudible] the city center. We are minutes away stocks on the move. Number this is bloomberg. To bloombergck markets. Go. Minutes to lets get your stocks to watch. Joining us for that is dani burger. With the to start off airlines. One of the big pieces of items is we are going to have air ridges likely introduced for the u. K. Which means some people will not have to quarantine. Sued, takingyanair the u. K. Health authorities to court. To do so,till going hoping to get more lenient measures. Are another banks want to watch. That is after the stalemate was ended. Undestag is bond b program. It is going to affect deutsche bank, keep their balance street sheet strong. The numbers from delivery hero, what they have reported is remarkable. Almost a doubling in orders for the second porter. They said they saw a bit of a dip in april but in the following month, they stock be a 90 increase. Pandemic factor of the , people not going out to restaurants. People are not going grocery shopping. They are just going out and ordering. 5 on trade rallied date. Delivery hero muchrman thank you very for that. The market open in four minutes time. Matt we are a minute from the start of cash equities trading. Here are the top headlines from the terminal. The spread of the coronavirus accelerates in the americas, with u. S. Cases jumping the most in almost eight weeks. Meanwhile, in england, pubs and restaurants will reopen tomorrow after months on lockdown. Payroll surprise to the upside. The continuing jobless claims show labor market weakness persists. Asian stocks still higher. U. S. Equities wont trade. Its the fourth of july. Well, its the third of july, but theyre taking that off in order to celebrate Independence Day tomorrow. An case closed. German lawmakers and the nations legal standoff with the European Central bank, voting to accept the kiwi measures taken were proportionate. It was basically completely and totally priced in by markets, but still an interesting headline. Were seeing European Equity indexes open up right now. You can see the ftse on the lefthand column of the global macro movers, green here. Not up substantially, and hence the tile remaining gray. Upins ibex also opening about 2 10 of 1 . Those are the size of the gains were seeing so far. The aex coming up 3 10 of 1 . The cac up 2 10 of 1 . All of the equity indexes were seeing open in europe and the u. K. Are gaining, but not by very much. Just slight gains. Youre going to see a fairly light day, as well, being that the u. S. Markets are closed today. Slightly riskts on after u. S. Payrolls from june beat consensus. While the 4. 8 million jobless rate fell 11. 1 . Those numbers, which donald trump described as historic, offset, lets say, by data showing initial jobless claims topped forecasts in the latest weeks and continuing claims edged higher. President trump the United States economy added almost 5 million jobs in the month of june, shattering all expectations. Is a spectacular number and helps the overall situation in honestly. Enormous sleep. On eighth enormously. On a standalone basis, it is an extraordinary report. Given what is happening on the ground with progression of the virus. These unemployment numbers, which looked impressive, are really stimulus driven. This data underscores how rapid things change in the covid tainted economy. Even though we did get a very important upside surprise today, its way too early to declare victory. Now, seniorg us multiasset strategist and, you know, weve been talking about the positive surprises we continue to get out of the u. S. Economic data. Of course, the situation is concerning with regards to the virus, but the economist looks like its doing better than markets anticipate. What do you think . So the issue here is actually were looking at the Rearview Mirror when it comes to jobs data. We had very strong numbers on payroll. There is no doubt the number points to a robust recovery and jobs, and the Unemployment Rate goes less. But looking at that, if you take a glass halfempty view, you realize the recovery and jobs in jobs was one third of what we lost before that. Additionally, you had a significant number of people, just under 600,000 i think, moving from this temporary category to the permanent category of unemployment. Thats a negative, as well. More importantly, and going back to this backward looking, the fact is we have a few setbacks with regards to the growth of the virus across the u. S. The question on all of this is a. In a false dawn. If the see not just virus surges, but if people start spending and the government withdraws stimulus to quickly. Too quickly. Those are the things were looking at, but overall, strong number for sure. This adds up to a decent recovery. Matt well, and we had, obviously, a fantastic youtube. The s p fantastic q2. Gainingwent up, basically a thousand points. Is that too far too fast . Do you think it has especially as we see renewed lockdowns and some of the hardest hit states do you think the s p has to come down some . Eah, as we look at the pattern of the recovery the decline in the following recovery and markets, compared to past instances, yes, its been the sharpest recovery. But it also came after the sharpest decline in q1. So anyway, it was just a really sharp v. Looking forward, yes, there are grounds to think the move in the markets will be more choppy, more arrangement. We think more range bound. We think we are in more of a recovery phase. Theres a few things to think about in terms of recovery, particularly in the u. S. , and valuations of climbed. S p is not just a reflection of the u. S. Economy as it is you have concentrated makeup. Its very tech heavy. Betterdaq has done because it is more tech heavy. The s p and the nasdaq simply have a large concentration of companies to go further in this environment. But the road ahead looked like q2. It will be choppy or. Choppier. It will be more resilient as it climbs higher. Course,u also add, of the support of Central Banks. Not that we expect that to be reduced, supriya, but we dont necessarily expect that to be increased either. Has that been priced in . So whether you look at the amounts coming from Central Banks from fiscal authorities, you look ahead at where its likely to be at the end of the year, its going to be twice the level of gdp that we saw in the gse. So theres no doubt this is helping markets. The low level underpinned market valuation. But thats justified to risk assets. If you have low yields, low bond yields, youre bound to see andations climbing higher those yields and risk assets coming down, and of the risk assets in the search for yields. Justifiedf that is and we dont see any pause in we dont think Central Banks are going to pair down Services Anytime soon. Week got indications this that would likely be the case. I think further lower guidance, none of that is likely to change. Valuations are justified in being hired then they would be otherwise, based on the quality. What we have seen in this crisis is significant fiscal support, not just in the u. S. , but in the u. K. And europe and elsewhere. That means it will provide support to the economy, and that will come through as we move from recovery based fiscal support to stimulus based fiscal support. Matt you know, one of the things weve seen through this crisis is a worsening income inequality. You have, in addition to that, the black lives Matter Movement after the killing of george floyd, and the popularity of President Trump has fallen some. How do you expect that all to effect markets and do you think that the election is going to be important for markets . Supriya yes, absolutely, and there is a connection with what is going on in the economy and the spread of the virus in the u. S. And the election. Theres a constant feedback loop. The worst economies, the worse the spread of the virus, the more it affects the level of activity, the more likely you are to see a democratic sweep. [indiscernible] so you could have rising probability of that. Actually, it is starting to be recognized by the market in some sectors, so we are looking forward into a more choppy and q3q3 going into end of going into q4. The fact is that a democratic sweep would likely lead to higher Corporate Tax rates, would likely lead to potentially higher Capital Gains taxes, more pressure on margins too high on labor costs. All of that has to be factored in. Of course, there are sectors that would benefit. Greenuld likely see infrastructure, stimulus or emerging from a democratic win. There are sectors that would benefit and we, in our portfolios, have the exposure to areas within that area, sort of green infrastructure, green spending as well. Likely he market is and if q3 going in end of q3, going into q4. Matt were going to keep you with us for more. Supriya stays with us. Coming up, ending the standoff. Backing off the bond buying program, allowing the bundesbank to stay involved in this scheme. Were going to take a look at European Assets when we come back, especially considering Angela Merkels push for a big relief program. This is bloomberg. Matt welcome back to Bloomberg Markets. This is the european open. Were seeing slight gains here in terms of European Equity indexes. Little change on the ftse. 300, you can see the csi hitting a fiveyear high, closing up 1. 9 . So, asian markets did quite well. European markets are not moving much. And to be honest, theyre really like. If you pull up your wei screen on the bloomberg, you can check time erage volume at column, and i can see, for 51 ple, the ftse is trading less volume now than it has, on average, over the last 20 days at this time. So, very little action in these markets right now. Big headlines, though. Germanys bond markets back to the ecbs bond buying programs, ending illegal standouts. The dispute was sparked by germanys top court, which ruled euroy, the 2. 2 trillion Public Sector Purchase Program could be illegal. That was the previous qe program, and not the current program. The vote in parliament means the bundesbank can continue to be part of the program. To be fair, it seems that was in, price in, but priced but lets ask our guest. Supriya, it seems like the real news would have been if they tried to somehow block this or say it was illegal, right . Everybody expected germany, in the end, germany to go along with the qe of the past in the pet program of today. Supriya yeah, would very much expect this wouldnt be an obstacle for further bond buying. I think that was priced in. No surprises there. However, what happened in the earlier gcc ruling that delivered was it shifted the onus of action onto the Fiscal Authority and onto the leaders to come up with a recovery package, and that very much stems from the fact that theres only so much the ecb could do. Allecb had been basically of the stimulus had come from the ecb and little joint action from the authorities on fiscal fronts. Yeah, please go ahead. Matt you can also see i mean, i love this chart. And you can see from the chart how much germany is also a beneficiary of the ecb bond buying program. Germans really love to complain about it. They benefit from it, as well. I love these charts. Theres a great chart showing the total Balance Sheets of the ecb versus the Balance Sheet of the fed, and i think the boj, even the boe, and its shocking how big the ecb Balance Sheet has become. Let me ask you about the fiscal side of things because Angela Merkel has said that the eu needs a massive recovery program. We know that she and macron have backed this 750 billion euro proposal. What do you think about that and how is that going to affect assets that you invest in . Supriya yeah, so if you think about the size of the package, even if that goes to 750 very muchhat isnt in proportion of gdp. However, its important in the signaling delivered to basically narrow risk premiums across european access, whether the assets, whether you look at equity. Announcement of a possible recovery package, as well as a thorough climb higher in the weeks and months. We have taken advantage of the fact that there is a continuing lower risk premium on assets, not just because of recovery funds and the signal that gives us, but also because europe has dealt with the virus better, being an indicator. We get services pmi today. We have allocated more of our portfolio to european equities, so we have exposure not just to the broader index, but specifically to areas such as construction and beefing up certain areas. Keep in mind pretty much every sector, we expect that discount to narrow. Thats something were trying to take advantage of. Givenect that, especially what we discussed earlier regarding u. S. Election and the impact it has on sectors in the u. S. We prefer your in the technique europe in the technical horizon. Matt alright, thanks so much for joining us. Great to get your insight today. Ave a fantastic weekend she is going to continue the conversation on Bloomberg Radio and 9 00 u. K. Time. If you want to hear more, just london, dab digital radio. Anywhere else, just google Bloomberg Radio and you can figure it out pretty quickly. We look at the challenges assessing Workplace Diversity when data is sparse. Thats next. This is bloomberg. Matt welcome back to Bloomberg Markets. This is the european open. We are 23 minutes into the session and your seeing a market thats really going nowhere on this friday, the ftse slightly down, as is the cac, less than 1 10 of a percent, the dax slightly gaining, as well. But the volumes are incredibly low. Were looking at half the volume on the ftse youve seen on average at this time. And volume on the dax is down by 25 , as well. Youre seeing those figures across europe. On the issue of diversity, you cant manage what you dont measure. Pledged Many Companies to improve racial equality, very few have used the tools. Mostly, this is because of lack of mandatory closures disclosures around the world. In the u. S. , just 5 disclosed data on minorities and in the workforce. And in some parts of europe, there is no data at all. For more on this, were joined and this isanalyst not just because it is the right thing to do, but also important data that investors could use to their benefits, right . Right. Ah, thats exactly one of the things we found during the pandemic, they started to focus more on social issues. With the killing of george floyd, weve seen corporations and investors step up to the plate in this issue. Research has shown, despite the feelgood factors, diversity can have material financial benefits for companies and investors. Difficult tos come to a wide spread conclusion without data. And investors are finding theres not a lot of good data out there on racial diversity like there is on, say, gender diversity. We found only 6 of the companies we track globally report minorities, and only 2 at the management level. Matt you mentioned, by the way, george floyd. Let me ask you about the income inequality issue in the u. S. Because we also hear that, for example, jeff bezos, the richest man in the world, is getting even richer throughout this crisis. Right. Ah, thats im not a huge fan of headline reporting because they can be a little misreading. You are not always looking at equal pay for equal work. But if you dig into why that is, you find there is inequality across the workforce. Theres just not the same level of representation in the management, technical roles. In many ways, this reflects structural inequalities that reflect inabilities or unwillingness to recruit minorities in more skilled, higherpaying rules. In the 21st century gig economy, disproportionate amount of roles where they are not receiving fulltime employment with the cushy benefit. Rob, thanks very much, and you can check out robs work on bloomberg intelligence. On your terminal, im sure you know this, but if you hit bi , you get a library of wealth of information there. Rob, an esg analyst for bloomberg intelligence. Whenkensignton up next, can Central Banks reduce . We put that to our longtime analyst. This is bloomberg. 49. 50 i found you good job. Now im gonna stay here and you go hide. Watch your favorites from anywhere in the house with the Xfinity Stream app. Free with your xfinity service. Now any room can be a tv room. Stream live tv, on demand shows and movies even your dvr recordings. Download the Xfinity Stream app today to stream the entertainment you love. Xfinity. The future of awesome. Matt welcome back to Bloomberg Markets. This is the european open. We are 30 minutes into the trading day, but its a very light volume day, possibly because he was markets are closed to get prepared for tomorrows Independence Day celebration. Freedom from, well, the kings tax collectors, i guess. Lets get to the bloomberg first word news. Here are todays top stories. 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. But democratic challenger joe biden is less optimistic. He says well its good people are getting back to work, its no victory to be celebrated and the u. S. Is still in a deep, people. Deep hole. Brexit negotiators are honing in on a broad agreement. Thats despite talks this week ending a day earlier than planned, or maybe they plan and it earlier because theyre diding earlier be and a day earlier ended a day earlier because theyre getting a plan. Sticking points remain. China Services Activities jumped in june. The gauge reached the highest 2010. Since april the survey focuses on Smaller Companies and paints a brighter picture for the economy than the official rita official readout. Global news, 24 hours a day on air and on quicktake by bloomberg, powered by more than 2,700 journalists and analysts in more than 120 countries. We are getting breaking news right now on the french cabinet reshuffle. It looks like the pm, Edward Philippe, has resigned. And that was one of the big, lingering questions. We spoke about it with Carolyn Caroline connan. Im sure you see it. Resigned, p. M. Has and so that will be the beginning of this reshuffle that were expecting to hear more about throughout the weekend. Lets get over to Richard Jones right now and talk to him about a number of issues. I feel like because you are canadian, you are also partly french, although i know that as a canadian, your subject to the majesty, the queen of england. What do you think about this very popular p. M. Resigning during Tumultuous Times for the country . Richard well, i think its something that Emmanuel Macron needs to shakeup his administration. The election isnt for a little while yet, but he needs to breathe new life into the administration. I think this is part and parcel to that goal macron is searching for. With the pandemic being a big issue in europe and weighing on the economy, i think that macron and merkel working together on this joint initiative for the european Recovery Plan is something that is going to require more vigor on the french side. I think macron is shaking things up to try and drive this big move towards a european Recovery Plan. Matt is he going to, together with Angela Merkel, who is going who has said europe needs a massive Recovery Plan, going to be able to push this through . Is she going to be able to push this through . The power and the political weight of Angela Merkel, does that get things done still . Richard well, that, i think that the one thing well, matt, i think that the one thing we see is that she is riding high in the polls and shes willing to deal Political Capital to push this through. Its been a pretty big change in fiscal policy ever since the pandemic started to drive the economy. Youve seen germany go from a fiscal hawk to be fiscally dovish and wanting to be expensive. Expansive. Thats merkel. I think if they are able to plan to pass any sort of plan that resembles anything proposed, we could get a big deal. Lower,ad a move sharply but they could drop to a record low if we get this Recovery Plan past. Takeusly, this is going to conditional on the ecb continuing to be an aggressive buyer of bonds. You had a Broad Coalition of ruling and opposition parties that backed the program. That removes an expander in the works. Macon stand a and chance of passing this thing, and if they do, it could filter through to the rest of your in the next 6 the rest of europe in the next six months. Matt with all of this going on, the covid crisis especially, and the result in economic hit and hopefully recovery, brexit has, in a sense, followed by the wayside. We havent really seen the pound move that much. Do you think the markets are paying enough attention . Richard yeah, i think they are paying attention to it, but i think they put it on the back burner because the real sort of dday for brexit is sometime in october. I think thats what Michel Barnier said. I think thats the general view. Over the summer, theres not a lot of cheap men it. The for the pound cheap on it. I think for the pound, youll get an 8092 bring, Something Like that. I think alive your price action the livelier price action is going to be where this plays out. Matt let me ask you for your expectation in a Bigger Picture sense, richard. Youve been working in banks from toronto through the u. K. , now in germany. This is a huge change for germany in terms of their previous fiscal prudence. He mentioned btp. Debt levels sort to heights soared to heights we havent seen before. In gdpould be 150160 here. What that next year. What does that mean for europe . Richard in the grand scheme of things, what this proposal is telling us is europe is about to change and it has to change. Do you need to have joined up thinking on fiscal policy and Monetary Policy . I think we have sort of an inching towards that since sort of been inching towards proposal. The they are aggressive with an unprecedented plan. The ecb will continue with its programs to try to keep costs low, to implement these plans. But it does mean a fundamental shift in europe and i think probably, in the longerterm, its been needed, and its a fundamental shift for the better. Matt thanks very much for joining us. Great to get some time with you. Richard jones, our mliv rates strategist. You can read richards piece on the eu presidency rippling across markets. I should also wish you a happy Independence Day. I think canada had its own Independence Day a couple days ago. Not quite sure from what they became independent, but still a reason to celebrate. Coming up, bridgewaters ray dalio says Capital Markets are no longer free. Well hear from our exclusive conversation with the worlds Biggest Hedge Fund next. This is bloomberg. Because were in this late stages, were in a lot of debt. We were going to see Central Banks Balance Sheets explode. The choiceo because is the sinking ship. Matt that was ray dalio, from bridgewater, cocio and founder of bridgewater exquisitely speaking to Erik Schatzker on our own program, bloomberg front row. The french Prime Minister Edward Philippe has resigned as a menu macron Emmanuel Macrons cabinet shakeup continues. Us on thisnnan joins story. Walk us through the importance of this piece of news. Caroline basically, that means the new government should definitely be named over the next few hours, but it could still take a few days. Test. S the first the Prime Minister always resides in france with the entire government before the new government is named. And in fact, the next Prime Minister will still be called eduoard philippe, so it is possible he will eat a new government lead a new government. The question is, is it time for Emmanuel Macron to change the Prime Minister after this green wave all over the country . Also, his popularity has been higher, consistently higher than Emmanuel Macron the past few months and during the pandemic, so it might be time for macron to change the leader altogether. A few womens names are circulating, including the current defense minister and the former head of club 21 a few years ago, when france was leaving violent international conference. New,learly, this is a fresh start for Emmanuel Macron to give some new direction, new patho the before the next election in 2022. Matt what is philippe enjoy such great popularity in france . And if hes not made per minister, what is the future look like why does philippe enjoy such great popularity in france . And if hes not made Prime Minister, what does the future look like . Richard he was caroline he was elected mayor. If he is not named Prime Minister again, he will go back and be mayor of this town. The popularity has been due to two factors. First, hes considered quite right wing, which reassured business and Emmanuel Macrons electorate. And second, the hiring dish handling of the crisis. Handling of the crisis. Retirement reform and the covid crisis and the pandemic, hes been handling the crisis pretty well. Its quite reassuring for a large majority of the french. The last poll shows him at 55 popularity, were Emmanuel Macron is around 35 . Matt thanks for joining us, Caroline Connan talking to us about this story, the french p. M. Has resigned. Philippe, sorry. Why was i thinking about hank paulson . Rental e scooters will be legal in the u. K. From tomorrow. Well speak to one of the biggest rental companies in that space. I love these things. Try not to hit anybody. This is bloomberg. T,matt matt alrigh first off, Angela Merkel speaking. Youre hearing a lot of what youve heard the last couple of days. Shes still pushing for this massive agreement. She really wants it. Its her goal. Recovery fund negotiations are rocky. Youve got the frugal four. Thats a problem for her. Said she is linking this to climate protection. Its going to be a driving force for esg, which has to help her a little bit get it over the line. She says europe needs digital sovereignty to compete globally, maybe a slap at u. S. Tech firms. Any case, well keep an eye on any news news new news. Theres a possibility in the u. K. , not just going to pubs and bars tomorrow, but youre going to be able to write ride escooters there. The governor hopes it could lead to cleaner air and healthier communities. Many of the worlds biggest rental Companies Plan to roll out fleets across the u. K. , including sweden. For me, hard to believe they werent allowed because im so used to using these in berlin, frankfurt, and germany. But i recommend britains try them. Were going to bring in the companys regional manager. Richard, have you got your escooters ready to hit the streets of london so people can take them on pub crawls, visit the new restaurants that are ride may be ri maybe one back to the Hotel Richard certainly on the pub crawl, but yes, we are ready since the governor announced they would be legalized and trials would be starting this year. We have been ready to go. How has the crisis been for each Group Companies companies er i companies . Lot. E these things a but i havent during lockdown. Theard yeah, certainly lockdown has had a mixed effect. We can see some of the larger operators down on their knees from the west coast to america. Some have seen job kinds 4050 . Underwent a fund raise, so the industry has been in a tough position. Whats really exciting, it seems to be a lot less affected by covid. Because of the markets were operating in. Companies operating in markets number one. Lets say the nordics and scandinavia, there has been helpful to us because those markets have been opened throughout covid, which is helped kept us ahead of the game in the markets. Matt i was shocked to learn these arent allowed in london. The city basically creates the worlds biggest traffic jams to let cyclists drive on the roads. Where else can you not yet use an escooter . Richard so, based on current letter station, we will see from tomorrow current legislation, we will see from tomorrow. It is still subject to the city issuing licenses to a few and select number of operators. So you will still see over the next two months a kind of phased rollout of cities across the u. K. From london to birmingham to manchester to liverpool in the next two months. And these will beat 12 month trials. And theyre looking at gathering quality data. So they will be participating in tables and regular updates for the government to show scooters andu. K. To reduce improve quality. Matt i have so much fun riding these. Ive completely given up on taxis and im sure thats improved my Carbon Footprint. Ive also stopped by all my Favorite Stores or discover new ones when im writing riding my scooter. Is there a way to harness users data . It seems to me that would be fairly profitable considering you can figure out what people like and what they like to do by where they stop. Richard so, from a data perspective, we have to be really, really careful from a gdpr regulatory standpoint so weve got to make sure were not using data thats not agreed to by the user. But we can say we provide an experience that puts users at a point of need. Thats when you start to see a mobile shift. We want to see people go from taking cars to taking a letter scooters, reducing their Carbon Footprint taking electric scooters, reducing their Carbon Footprint. We also need to get people away from public transport so they can get moving in cities and get back to work whilst maintaining social distancing guidelines. Matt i also think public transport, sometimes a little distressing. These scooters improve your mood. Maybe thats just me. Its a little editorializing, i admit. Richard, great to have you on. Youre going to be able to try those things out tomorrow and england for the first time as the pubs and restaurants reopen on Super Saturday. Thats it for the european open. Stay with bloomberg television. Surveillance is up next. W . W . Uhiono u. S. Stocks a surprise bid to the upside. Coronavirusf the accelerates, with cases in america jumping the most since early may. Case closed. The ecbsmakers back qe program, ending a standoff between the central bank and the nations top court. Writtenssaturday, Prime Minister Boris Johnson will tell citizens to
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