Analysis. Kit juckes this morning was smart, smart, smart. One calculation i saw was it was only 5 of gdp, and that is a squishy number. But that aint much. You really wonder, whether be a second deal if the slowdown in europe continues . Francine it is 5 but every country has to ask for it, so it wont go to everyone depending on whether they need it or not. The other thing is that he could be the first step toward more physical integration in europe. It is a path forward, and that is probably why it is being heralded by euro files as something of a great deal. Lets get straight to the bloomberg first word news in new york city with ritika gupta. Ritika as you were discussing, it is a done deal. European Union Leaders have agreed on a landmark 860 billion economic Recovery Fund. It is split almost equally between grants and low interest loans. It will unleash vital Financial Aid to the southern european economies it hardest by the coronavirus, and it is being paid for by hundreds of billion dollars of common debt. That is the first time e. U. Has done that. Steven mnuchin and nancy pelosi begin talks today on the next virus relief plan. Mnuchin says the next phase of jobselief will be kids and and vaccines. Republicans may push back on what has proposals forgetting schools reopened and business hiring. In the u. K. , there is more pressure on Boris Johnson to take a harder line on china. Mike pompeo meets today with senior members of parliament. Those lawmakers will want to see sanctions on china. They also won china cut from the u. K. s new their power program. Global news 24 hours a day, on air and at bloomberg quicktake, powered by more than 2700 journalists and analysts in more im ritikauntries, gupta. This is bloomberg. Francine . Tom . Thank you so much. Equities, bonds, currencies, commodities i want to take some time here because we are doing a lot across bloomberg surveillance this money. Itt a rally yesterday, and continues this morning. Futures up 23, dow futures up 1. 79. You see it in the vix, and it is absolutely extraordinary 23. 96. For those of you not part of global wall street, that is a huge deal. We have vaulted from 32 down to 23. 96. The longterm averages about 20. The glory days prepandemic were 14, 13. We have made some room there. The dow closing. 26,000. I know you will talk about the german spread. The german tenyear is put much stasis. Nots surprised, frankly, all that much move. Thecine i did not look at spread. I looked at it, but i decided not to put it in my did check because they moved yesterday. Yesterday we spoke to a couple of strategists who said it was already priced in fulltime if you are a political analyst, you could say that this is the first step to political integration. Europe got a deal. This is something more than we were expecting. But if you are a trader, you would have played it yesterday. Youre right, things are moving sideways. European stocks are priming a bit because of this Landmark Recovery plan, but the big move was yesterday after we were told that they would meet again. So it was already priced in. One thing i want to show you come which i dont think i have done this year in my data checks, extending gains above 20 an ounce for gold and silver. It is the third day of gains for silver. There are interesting dynamics when it comes to silver. To talk about the e. U. Recovery fund and what it means for the ,arket, turning us is geoff yu strategist three mea markets. Ray to speak with you. Noted, a lot of the feelgood factor on the markets because of the Recovery Fund was because they it was before they signed up with a deal. Is the market going to ignore the simmons plan . I dont think the market will be because they see some structural changes which europe has brought about in achieving this deal. So i think the good deal for markets will be for some time. Europe ishe fact that handling covid better on a relative basis and maybe can generate a smoother recovery, that will make a difference for asset allocation, especially in equities. Francine does it have an impact on euro at all . Geoff here is going to be the interesting one because if the Equity Investor goes in on the hedge and tried to benefit with some of the currency, the tailwind that we have seen, then it is possible. But at the same time, do you really want to chase the euro aggressively from these levels . That i am more cautious about because a lot the lack of export growth and the impact on inflation as well. The ecb might push back against it. But on the margins, asset allocations, europe will benefit. I just dont want to chase it too aggressively. Tom geoff yu, one of the great home what of the great metrics here is fiscal amount is a percentage of gdp. It has been 10 , 12 , 15 , 17 . One number was being carried of 5 on this deal. Is this an ittybitty deal . Geoff i dont think so. It is more about, what is the Multiplier Effect from a natural realized investment point of view, but also a sentiment point of view . There is where europe could actually be in good stead because if the result is more than savings, channeled into the south and actually lifting productivity, it lifts growth to something that is actually longer term sustainable and positive. Then i think the return is better. Tom i want you to be an engineer right now. Youre in the netherlands and you are not happy. Dr. Know got some comfort but not too much. You are going to provide direct stimulus to italy. Youre telling me it is going to have a Multiplier Effect. What is it going to go into in italy . Gondolas in venice . Geoff we know that italy does is looking at Infrastructure Improvements over the last few years, and there have been instances where that has proven to be necessary. If you are a dutch engineer, you should be submitting your bids, your rfps, saying how you can deliver the best in class, and that is how they should be looking at it. Where a rising tide should lift all boats. Francine what do you do with gold right now . Geoff gold i think will be seen as the quintessential inflation global centraln bankers, they seem determined to keep real rates down for as much as possible. People have been talking about the brain art speech. Let the economy run hot. In that only do well kind of environment. Francine thanks so much, geoff yu of bny mellon. We will have plenty more from him shortly. Coming up shortly, alexander stubb, we will talk about the Recovery Plan. York, 10 30 a. M. In london, and this is bloomberg. Tom bloomberg surveillance. Good morning around the world where europe changes. There is no other way to put it. This is a Historic Deal by all accounts. This is a huge, huge shift over the 63year history of the european the modern european experiment. Francine lacqua and london, im tom keene in new york. We continue with geoffrey yu. I have to go with prosaic matters like a surging stock market. I am going to go there. Why are stocks surging . Geoff two reasons. One, we have to acknowledge the policy element. Two, there is no reason for markets right now, despite seeing the covid headlines, to suspect a broader recovery trend is going to be disrupted. The question is always, will earnings deliver expectations and the reality is that clash might still come. For thet does it mean larger Multinational Companies in switzerland, in sweden, and all of europe . What does it signal, this day of fiscal union, and also a day of corporations adapting to reality, which leads to this guesstimate of a surge in 2021 . I think there are are quite ank there few things. I think in the south they are going to get the investment, but the funding costs to get the investment will start to come down, so they will have more resources on a marginal basis. For european companies, multinationals come if you are group worried about global decoupling and deglobalization, look closer to home. You can see a surge of demand from the immediate neighbors. You mention switzerland, absolutely. The second point is they probably dont have to worry about a sovereign shock for a long time now that there is a mechanism to redistribute. That is the key phrase, to redistribute the resources. This makes longterm planning much more viable. Are they going to increase their investment in the region, not just with customers but invest locally as well. That could be the list everyone is waiting for in europe. Francine where do you see the most value in europe . Do you break it down by companies or sectors, or are there country plays . Geoff i think if you look at some of the sectors which have been beaten down quite a bit in the last few months, consumer cyclicals, for example, that is where the Covid Recovery process improves, plus all the fiscal resources. Energy, probably given the state of global growth, that still might be a bit of a laggard. But the high value we are looking for new sources of growth, not just in china but elsewhere. Now in europe as well. They stand to benefit the most. That could be next years story if you look at the mechanism. Also king francine looking also at pictures coming out of brussels, frugal for leader the frugal four leader, i think the building over in brussels, when you look at the way that europe ridge differences between north and south and east and west, are we going to see a more integrated europe, where are we going to see the Franco German being notonveniently attacks but not listened to . Geoff well, i think that is where we need to caution our expectations somewhat, because lets bear in mind, this was a oneoff. The budget framework was always going to happen this year. If covid had not happened, will we have a part of the budget which would be financed by common bond insurance . I dont think so common bond issuance . I dont think so. Can the next budget process incorporates something along the lines of what we saw supporting framework . Ce gree i think that is when we can truly get the hamiltonian movement in seven years time. Tom i dont hear people today talking too much about a hamiltonian movement. We will talk about that in a bit. Geoffrey yu, a brilliant brief. To come. Much more we are going to look at these markets surging. Futures up 22, down futures up 164. Dow futures up 164. We will continue to focus on this historic moment for europe. He is thrilled again joining us, Wolfgang Munchau, coming up next. This is bloomberg. The stakes couldnt be higher. The differences remain very great, so i cant say we will reach an agreement here. 50 . Will say less say we have to be cautious. The majority of the Member States coming close to four countries, but they also need to make an effort. We have come up with a response to this arguably biggest crisis of the European Union. Today we have taken a historic step we can all be proud of. The conclusions reached as a result of this summit are truly historic. We sent a strong signal to europe. Francine european Union Leaders have agreed on a land mark stimulus package after four days of dramatic negotiations. For people on the ground in brussels, a brilliant story for the backstory, which basically said the leaders started off on friday on a sunlit terrace, drinking mineral water, finished in the early hours on monday with wine and potato chips. I thought that was a colorful image that encapsulates the tense negotiations that we saw. Joining us now to talk about this is Wolfgang Munchau, euro intelligence director. Ray to speak with you on a day like today. You are optimistic but a lot more cautious, and many other people out there than many other people out there. What do you worry about, given the deal that was mustered together. Wolfgang it is good is that france and germany have stayed together. This deal. Close at andthe actual money the acrimony that because, there was a lot that we wanted to do with the e. U. Budget that it cannot do. The Hungarian Prime Minister in particular got what he wanted. They also wanted to get rid of these budget rebates. You will member you will remember that the british asked for a rebate in the 1980s. We knew where that ended, and now britain is gone. The netherlands, austria, denmark, and sweden, are all thending rebates, and in case of austria, austria even doubled the rebate it got because of its difficult negotiating position. E. U. He third thing, if the transition tohe Climate Change research and development, much of that money was cut in order to leave enough space for the fiscal transfer. So basically this is not the kind of budget that you wanted. And weas sacrificed, have to ask the question, is this worthwhile . Recoveryy since the facility is not all that big. 0. 7 of gdp for three years running. That is not nothing, but it is thathis great fiscal force people had hoped for. Francine is it better than nothing, and a lot of the euro files say this is a first step toward integration. We were talking in the break that there is a chance, and i dont know how big that chance is, that Parliament Says it is not worth it. With the ever say that the path is toward keeping europe together . Wolfgang you cannot conclude from this package that this is the beginning of a process that will eventually lead to a neutralize fiscal policy or a neutralized debt instrument. You cannot say this because it is an exceptional thing based on laws that make business exceptional. You cannot make it on an exceptional law. That would be a contradiction in terms. They have to do it again. They have to change the treaty in order to institutionalize that. After what happened over the last five days, i see zero chance of the treaty change. Tom we are going to go back and talk about this, but this goes back to the heart of the matter about this, and the matter is strasburg. Explain to our global audience that this is not both people in brussels, brussels, brussels, and is strasburg at the European Parliament really matter, intricately on poland and hungary, are they going to tell brussels to go to hell . Wolfgang they will not use your words, but they may do so. What we have heard, what we have heard this morning, they are not happy with it. They are not happy based on the rule of law, so i am not happy with it either. They are not happy about the investment, and the commissioner proposed money for lots of good things. The most encouraging things about the budget. Also equity investments, rather than loads and grants, than loans and grants, most of it is gone. And they are not happy with it. What they might do and this is my expectation they are not going to vote it out, but they might say we want changes. The whole thing might go into another round, and one of the leaders, leader of the socialists, already said that he would like that she would like in another round he would like another that he would like it is goingound to be difficult. Tom we are going to come back with Wolfgang Munchau. We are squeezed her time on a superb show today as we are squeezed for time today on a superb show today. This is important what wolfgang is saying, that is not all happy, happy, happy on a tuesday money. You may get president ial Pandemic Press conferences this afternoon. Mr. Van of maryland. Look for him in the 8 00 hour mr. Van hollen dove maryland. Look for him of the 8 00 hour. Bluebird. Good morning. 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. More voluminous hair instantly. All it takes is just one session at hairclub. Introducing xtrands. Xtrands adds hundreds or even thousands of hair strands to your existing hair at the root. Theyre personalized to match your own natural hair color and texture, so theyll blend right in for a natural, effortless look. Call in the next five minutes and when you buy 500 strands, you get 500 strands free. Call right now. upbeat music Tom Bloomberg surveillance. Good morning, everyone. Historic day for london. We are trying to give you perspective ford, not the happy, happy. We can do that with Wolfgang Munchau. I miss of it im percent work over the years. Magnificent work over the years. They have to get this thing through. You have alluded to a redo. What is the power that Eastern Europe has right now. What is the spell that hungary, poland, and the rest have over the more diplomatic west . At this point they have a great power because what is needed for the budget. A secondoes into round, they could be to this. That is why he got away with what he did and said i will not accept a rule of law linkage. Whatever Parliament May say, there can be no budget without the complete ascent of every other country. So this has to be a compromise. At least that will compromise in the end. De was a dealmaking machine. This might go into a second round. Things that were taken away could be called back by parliament. That will be the procedure i expect the next few days. They say at this moment . I think some of them would have probably gone a different route. Many followers of the eu and euro files would have preferred a Smaller Group of countries to do this rather than getting this done as the whole of the eu, proceeding with a Smaller Group within having a bigger facility. For example, they could have where at least Nine Countries can gang up together and do whatever they want to do among themselves. They couldve had a much bigger budget. They could have done this, especially since germany and france hang together and italy and spain are on the same side. They could have basically done this among themselves with a few allies and wouldve had enough to get over the threshold of nine. In fact, they would have gone far over the threshold. The