Stage an uprising over the euro grew presidency striking a blow to the blocks major powers. Merkel says the eu needs to combine aid with rome forms reforms in a message to the fruit before. Equities slip. Stock rallyhot cools. State funds start selling, assign the government wants to slow the surge. Daily virus cases in the u. S. Continue to hit new highs, worrying investors. Stuck in the middle. Global banks risk being caught in the crossfire of chinas new law in hong kong. U. S. Sanctions against it as compliance with one may mean breaching the other. Just under an hour away from the start of cash equity trading across the road. Take a look at futures here. We are looking at red arrows. Not a lot of size there. If you look at u. S. Futures, red arrows that are much bigger. 5 10 of a percent losses. S p down. Nasdaq looking a lot more risk off in terms of the futures contracts then european futures contracts do. What do you see on the gmm . Anna the selling you were talking about in china. Lets have a look at where we are. Hong kong down by 1. 8 . The chinese csi 300 down by 1 . We saw eight days of gains. We now see state backed funds selling and chinese markets. Reason to pause. You went through weather futures are for the u. S. And u. S. Interesting to see the way that tech stocks stood out in yesterdays session. The nasdaq outperforming in the u. S. The dax in that, outperforming in the European Markets. Thats an interesting seem to pick up on once again. We see a lot of selling of emergingmarket currencies. That goes in tandem with the risk off we are seeing in equities. We see Dollar Strength coming through. Dollar to the upside. Emfx to the downside. Fixed incomes and emerging markets. Lets get an update on the bloomberg first word news. Here are the top stories we been covering for you. The Coronavirus Crisis in the u. S. Is showing no signs of abating. Daily cases topped 60 thousands 60,000 for the first time. Across the pacific, australia is tightening travel and reviewing its quarantine rules. A recent spike of cases in melbourne. Nations most powerful were handed a sharp defeat. Irelands finance minister one the ballot, backed by smaller members. Minister wasconomy the preferred candidate for germany, france, italy, and spain. In poland, the president says he will never allow compensation for property lost in world war ii. The conflict is resurfacing the day before the president ial runoff election. He faces tough competition from the warsaw mayor. Trump have told give up his tax returns but it is unlikely they will be in the public eye before the november election. The Supreme Court rejected the argument the president has complete immunity while in office. He has to comply with a grand jury request for the record but they blocked congressional access to the information. Global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. Matt . Surgethe chinese stocks has taken a day off today, been sent home amid state selling from state backed funds. European futures are lacking direction as the stoxx 600 posted its third day of losses yesterday. Lets get into markets now with laura cooper. I find this china story fascinating. State got these big related funds that are making sales in what is being interpreted as a message to Retail Investors to get back. Right . Laura thats what the government is signaling. The fact that the rally has likely gone too far, too fast. Look at equities. Theyve added one trillion so far this week alone. I dont think that this is necessary a harbinger of the major selloff. See more ofants to a pause. It tells us that regulators have learned their lesson from five years ago, in the sense that they are trying to act early before leverage gets out of control. If we look at leverage ratios currently, they are sitting peaks in versus 4. 5 2015. They are trying to get in front of the situation before we see the type of selloffs like we saw back in 2015. Even the selloff that we saw today, Foreign Investors are pulling some money. Thats in the context of adding 63 billion so far this month. Just a more muted pause at this stage and not a sharp catalyst to hedge. Anna the extent to which this is in control of the authorities is interesting. The 2015 rally in the shanghai composite certainly lasted a lot longer. We will see what they deem to be appropriate this time. Let me ask you the market life question of the day. The way stocks can withstand a fresh virus wave or a continuation of the first wave, as we are seeing in the United States. What are the clues you are getting and markets . Laura we are seeing, up to now, investors have been unperturbed by the rising infection rates we are seeming seeing, notably within the u. S. This is because stocks have been propped up by pillars of monetary support, fiscal stimulus. Early signs of an economic recovery. We are seeing that part start to stumble with indicators telling us that the economic recovery in the u. S. Is starting to slow. I think at this stage, its more a case of whether we actually see rising mortality rates. If that seeps into consumer and business confidence. Clearly, that is what is going to be dictating the economic recovery from here. Stocks are pinning hopes that we could still see a fairly robust recovery in the u. S. , we could is shaken see more range trading for now. Matt although, you have to wonder what would happen if you got even more stimulus than the market expects, either physical or from Central Banks. We do see an expectation being is going that the ecb to boost its purchases. Laura that is the case. That certainly seeing anticipation of another 500 billion in addition to the pandemic emergency processing plan later this year. This integrates the degree of uncertainty on the outlook. We are seeing more encouraging sides coming out of europe in terms of the growth recovery. There are still hurdles ahead. Notably around the fiscal stimulus package. Consumer spending begins a pullback or those highfrequency indicators begin to stall. This is the scope for the jobs recovery, both in europe and the u. S. We have millions of workers still on furor furlough schemes and benefit schemes. If those are not extended, that will present a risk to the outlook going forward. Whether fiscal stimulus is enough to combat that. That remains a key risk. Thats why we are seeing expectations for more stimulus in the pipeline. Anna thanks very much. We were just talking to laura about monetary stimulus and the possibilities in europe. Up next, a stimulus boost. Economists protect the ecb will expand its Bond Buying Program by the end of the year. We will be looking ahead to next weeks meeting of the central bank policymakers. Thats next. This is bloomberg. Matt welcome back. We are about 48 minutes away from the start of cash trade. Lets take a look at the Bloomberg Business flash news today. Top corporate stories from the terminal for you. The u. S. Is planning action against france in the longrunning feud over a tech tax. Sources tell bloomberg, the tariff list will be released, in the ballpark of around 700 million in goods. The items targeted could include french wine, cheese, and handbags. The u. S. May decide to delay bringing in the duties until france starts collecting the tax later this year. Global banks are at the risk of being caught between beijing and washington over hong kongs new security law. The scope of the new legislation has taken many businesses by surprise, especially article 29 which for bids sanctions for or other hostile activities. Companies that breach that rule risk losing their license to do business. Buyer is being accused of underreporting complaints of injuries allegedly caused by the contraception device ensure. Thats according to newly unsealed documents. It was marketed as a safe alternative to surgical methods. The fda put restrictions on the device amid mounting complaints. They stopped selling the implant in the u. S. In 2018 but stands by its safety. Thats your Bloomberg Business flash. Anna . Anna the euro regions smallest nation stage an uprising to but one of their own in charge of finance minister meetings. In a secret ballot, ireland won the vote to become president of the euro group. He defeated the spanish favorite who was backed by the European Unions for biggest economies. We are joined now by the senior political economist at aberdeen standard investment. We will come to conversations around u. S. Politics. We want to start on the european agenda. The surprise when for a small member of the eurozone, for ireland. Its an informal gathering, the euro group. Leading that group can be quite a powerful position. Does this tell us anything about where european policy is going to go from here . The longevity or otherwise of burden sharing. I think there are a couple of takeaways from an investor perspective. We have to view it in the lens of 10 years ago, during the crisis, the financial ministers were considered very important to us problemsolving. Today, it has lost that profile. That is reflective of the kind of central role of prime ministers and president s and chancellors from across europe in trying to broker the european Recovery Fund. Donahue is from a conservative group in europe. He won this position in spite a very strong support that his opponent from spain got. Sense that that was a big ticket favorite to win. Hassurprise suggests he support from northern and eastern states, which is interesting. Its hard to know exactly whos vote is for who. He said, hes in the middle. Ireland is a small country. Hes a relative conservative. His hope was that he could broker a truce between northern and Southern States best states. Now his question is his ability to do that against the context of very visible Political Leadership from some of the bigger countries in europe who have been central to this. It morees this make likely or less likely, in your opinion, that the Recovery Fund gets through . I think the markets have been counting on the power of merkel and micron to push the Recovery Fund through. If they cant even get a euro group head, how are they going to get 27 nations to agree on shared debt . This is really where you question the policies, one way or another. The important thing is that the alliance holds. That Franco German alliance has been reinvigorated in recent months, just at the right time. Thats probably slightly more important in terms of moving things forward. That being said, if you have the spanish candidate was a social democrat. Aain is pushing hard for generous version of the european Recovery Fund. Would it have made that much of a difference if you had spain at the head of the financial Ministers Group . Im not sure it would. If anything, maybe it would have law looked like the all caps odds were stacked in spains favor. They ngle members state. Someone seen as an inbetween, a supporter of the Recovery Fund but likely to be able to have credibility for both sides, it is positive. Were talking margins now. Anna if we do see the bailout fund being water down, it will be will it be water down in any material way . Will it be a saving face exercise for the for before . Frugal for . Laura think about this think about the size, the structure, the timing. In each of those, you could find compromise. Size, there may be some scope to decrease the size of it. That is slightly less likely. More likely is a mix of bonds loans and grants. Theres a lot of political negotiating going on to try to find the right balance. Timing is something that hasnt fully played out yet. Everything that ive read indicates that this Recovery Fund is unlikely to be able to dole out significant support in the shortterm, which is when states like italy needed. Its an interesting one. Theres a lot of focus on it. Of Recovery Fund, for a lot commentators, is a positive signal about willingness. There is debate about what precisely it looks like. Theres general support for doing something in this space. I think thats going to call into question other issues like willingness to drop on the fm. Spain is more willing if they know a Recovery Fund is coming. Matt thanks very much for that. Senior political economist at aberdeen standard investment will stay with us. We have more to talk about on the other side of the atlantic. Coming up, the Supreme Court rules that President Trump much share his tax return as joe biden calls for an end to the era of shareholder capitalism. We discussed politics and the u. S. Economy, next. This is bloomberg. Matt welcome back. This is the european open. We are just over 37 minutes away from the start of cash to waiting. Trading. Futures are declining. Those losses getting bigger now. U. S. Futures are still down as well. President donald trump must provide his tax return. The Supreme Court ruled the president has to comply with the new york grand jury request to access nearly a decades worth of financial records. The justices also rejected congressional requests for that information. That means it will likely stay out of the public eye, possibly until after the november a check election. Our guest is still with us. I guess the important part of this is whether or not donald reelection in november. What do you think . I think he gets harder and harder every day, particularly as we see the virus and continuation of the first wave in u. S. States. Challenge to keep a lid on that at a time with huge human and economic suffering. It is unusually difficult to be trying to win reelection. The nature of politics makes it harder for them. Interesting to listen to joe biden speaking, talking about how shareholder capitalism is going to come to an end eventually. Saying that companies have a duty to other stakeholders as well. He wants many businesses to pay more tax. What are the broader implications if we see him in the white house . This is an interesting one. That quote about shareholder capitalism and raising the corporate tax, the kind of story , this will be challenging for markets. You factor in your outlook for equity firms, things like corporate tax. We need to see the biden presidency in a wider lens. Its very hard to quantify the cost of uncertainty that weve had through the trump presidency, particularly around his strategy when it comes to key trading partners, economic policy. There was that significant back in 2017. In a biden presidency, a more mixed picture. You have to think about different sectors and parts of the economy. Jobs, by focused on american recovery. Thats the message that will speak strongly to voters and brings potential for improving things like productivity in the United States. Also speaks to a more obvious strategy for what policy looks like for the next four years. Its more clear than weve had with the trump presidency. You are trading off transparency for a slightly more left approach rather than we had with trump, very business friendly. Matt thanks so much. Not enough time, would love to have you back as soon as we can. Senior political economist at aberdeen standard investment. Fascinating conversation there. Up next, growing concern for global bank. They get caught between penalties linked to chinas new security law in hong kong and u. S. Sanctions being considered against that law. We are live in beijing, next. Us is bloomberg. The best tv experience just got better because now you can watch all your favorite hulu shows and movies on xfinity. Youre only a voice command away from Award Winning shows like the handmaids tale, to new hits like little fires everywhere. And fx originals you can only watch on hulu. Thats just the beginning of what you can experience with hulu on xfinity. Tv made simple, easy, awesome. Back European Market open. 30 minutes to go until the start of the trading day this friday in europe. Equity market futures do point to the downside as chinese stocks give up the recent rally. Heres a quick look at some of the events we are watching out for today. Voting is currently taking place in singapores election. Polls close at 1 00 p. M. U. K. Time. Final results from around 5 00 p. M. U. K. Time. Italy is under scrutiny with a sovereign debt rating update. That will come after the market closes. Runoff in the polish president ial election happening sunday. Opinion polls suggest the race could now be too close to call. Matt . The toughright, school of business at dartmouth, peter fisher warns investors should worry about chinas market rally, noting uncertainty and future corporate revenues in china and the u. S. Amid the coronavirus pandemic. He spoke to alix steel and guy johnson in an interview from new hampshire. The chinese economy for a long time, one of the few places uncertainty about the future can get expressed is in the equity market. The credit slice of the capital structure has been fixed. The government doesnt let a lot of corporates default. They have a way higher corporate debt to gdp ratio in the u. S. Has, but the government anchors that. More volatility will show through an equity markets, because that is where it can be expressed. The chinese equity markets have been pretty volatile over the last 15 years. You referred to the most recent episode. I thing it is worth thinking about that. Investors have a short horizon when the future is uncertain. We dont really know about the future income for u. S. Companies or Chinese Companies over the coming couple years. So people focus on a very short horizon. Yes, i think it is time to worry a little bit. Two things stick out to me. Authorities did crackdown on some margins financing. The rally then still continued. Also, you still have copper at its highest level in over a year, and gold at its highest level in nine years. You could argue that is investors like china coming back into the market. That to me says something different, like they are really recovering from covid. Yes, we dont really know, but you alluded earlier in the show to everything rallying. Buy everything. And maybe that is the case. We have been depressed, so by everything. I would j