nejra: good morning from london. with manus cranny live from dubai, this is "bloomberg daybreak: europe."." president trump says a china fully intact. substantial talks, but no joint declaration.

autonomy is said to have featured prominently. coronavirus cases reach a record fueled by latin america. infections in florida hit a record high while texas' governor said contagion is accelerating at an acceptable rate. 9:00: 6:00 a.m. in london, in dubai. what a morning. how to lose friends and alienate a president. would peter navarro be the man that would kill the china trade deal? that is the question posed to the markets. our next guest said a trillion dollar round-trip. words matter. good morning. you never want words to be taken out of context, do you? it certainly did radel overnight. overnight. it does really just highlight

even though we have seen a powerful rally from the march lows, how sensitive these markets are to any sign of risk out there. this takes us back to david bloom's comments. risk on, risk off. aussie, kiwi, you see the disintegration of risk off, straight back onto the fuel. how are the markets? on the screen in asia, which is interesting, because we have kept those gains. we did not see euro stoxx 50 futures budget. firmly in the green for much of the session. the s&p e-mini's, you saw them take a hit, then recoup losses, edging into the green. 10 year yield also moved around a little bit. you are right to point to the dollar. it gained and gave up gains on a broad index. a retreat in the yen. it was also the yuan that

reacted. a little weaker right now, not recouping all those losses. oil also taking a hit, falling from a three month high and staying slightly softer. manus: mr. trump has said the phase one trade deal with china is, quote, fully intact after spurred arro temporary stock slump. it all started with this conversation on fox news. --do you think the president he obviously really wanted to hang onto this trade deal as much as possible. he wanted them to make good on the promises because there had been progress made on that trade deal. given all the things we just listed, is that over? >> it is over, yes. --a:

nejra: u.s. futures and the offshore yuan fell before navarro walked back his comments, saying it had been taken wildly out of context, and the phase one deal continues in place. martin malone joins us now. we saw contracts from the s&p 500 fall 1.6%. we reverse that into the green now. to you expecting the market take further hits on concerns around u.s.-china tensions? they have fallen into the background a little bit with covid-19. >> u.s.-china tensions is a long-term structural issue. it's going to be in play -- it has been in play for the last two decades, it's going to be for the next two. people have to take a chill pill. peter navarro is a cheerleader for trump. he is also a well-known china hawk. in theot a principal

negotiations going on between america and china. the principles involved are the treasury secretary and the trade advisor. reallye the only people besides the president himself that discuss or change policy metrics. u.s.-china frictions are a lot more than just a trade issue, and that is what we had to deal with overnight. futures, down on the and that was quickly reversed. alluded to, that is a round-trip of over $1 trillion. relatively hypersensitive to commentary. basically, the noise escalates on declines, whereas actually we have relative silence when markets are strong.

manus: let us not be disingenuous. you gave the number, a trillion dollar round-trip, so i will hand that to you. i will take a headline from anybody, but i will attribute it. we need to take a chill pill. how do we play the chill pill? buy vols going into an election? what is the manifestation of the chill pill? >> basically, our overall estimates and assessment is it is very different for the bearish commentary coming from ray dalio with bridgewater. we expect a decade of double-digit gains in 2020. near-term,e, in the six to 18 months, we would not be surprised to see the s&p

trade to 4000 in the next one to two orders. nejra: what i found interesting overnight as we saw u.s. futures take a hit to the tune of as much as 1.6%. european futures have been absolutely resilient through the asian session. should we read anything into that in terms of if the market does get more jittery and concerned over u.s. china tensions, it is the u.s. stock market that is going to take a greater had been europe, which has come back in favor with some investors with the action the ecb has taken and also with recovery fund? extent, what is going on is basically the u.s. market is leading these issues. we have to be cognizant of the fact that everything that has lagged. andmerica, the technology the health care sector makeup 52% of the u.s. market. they have led the rebound since

we hit lowe's in march. , theylook at u.s. stocks are much lower than the last 12 months. it is very careful we have to be here of taking are starting points. first or we can pick the trough low on march 23. if we look at the road in 12 months, the u.s. stock market is up 5%, the european stock market is down 7%. global stocks are up. areeuropean stocks share significantly lagging. we see this in sectors, in the corporate bond markets with high yields, emerging markets lagging. we see it in the currency space. literally what we are seeing in the month of june, a week left in q2, we have all the laggards playing catch-up trader. manus: let us just delve into

one of those. . want to take a listen talking credit. surprised byn most the lack of panic. the scenario you go through in --sis, there is a crisis of money markets in the last financial crisis, that's what we spent a lot of time talking about. people start moving up the credit spectrum, they go into short-term bond funds, we see more inflows then we have in the past 13 years together. that is a barnstormers. more into high-yield eps. is that done? >> not at all.

we call that the led trade. for instance, this emanates from the footprint of monetary dominance. the central bank intervention is around $10 trillion in the first six months of this year. almost all of that in q2. monetary dominance can be best looked at as, where is the 10 year u.s. treasury? we are trading at 0.7. this basically is one of the most important -- this is the most important price in the world. everything else emanates off that. , whethere other yields it is the credit bond yield or the emerging market yield or the high-yield junk-bond sector, those spreads start compressing very quickly. threeors have to do different strategies. they must build up external positions. they must diversify.

all of those basically mean we have a spread compression. that is what central banks want to see. we see they are helping that with the corporate bond intervention from the ecb, the bank of england, the bank of japan, and the fed. manus: hold those thoughts. the led trade is lit. martin malone stays with us. let's get you up to speed with first word news. morepence is warning of people testing positive for coronavirus. the concerns echoed those of texas governor greg abbott. the state may pause or reverse its reopening as the pandemic continues to spread at what he calls an unacceptable rate. johnson is, boris

set to move onto the next step for listing the coronavirus lockdown. the move is expected to get the green light for museums in england to open july 4. the prime minister will also alvingce whether he is hl the social distancing rule. a high-level videoconference. tensions have risen. the leaders criticized china's plans to curb hong kong autonomy and discussed beijing's handling of coronavirus. --bal news 24 hours a day global news, 24 hours a day, on air and at quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. nejra: coming up, v-shaped recovery. steve schwarzman says he sees a big rebound in the next few months.

manus: it is "daybreak europe." ceo stevetone schwarzman is showing increasing confidence in an economic rebound after the coronavirus pandemic saying he expects a v-shaped recovery. he spoke at the bloomberg invest global summit. a big v inalso see terms of the economy going up because it has been closed. as people are allowed to go back , the economy will really respond a lot, but there's only

an economy that is highly complex can respond. just because not all things go up equally. it will take quite a while before we get back. to 2019 levels. >> when i think about your experience, i know blackstone is a place where you are always looking at opportunities and new opportunities in many ways. i think back to the the-of-the-century, investment you made in real estate, i think about the last financial crisis and how you invested to credit. what is something you're doing now -- take us inside blackstone -- that might help us understand the opportunities that exist in this latest crisis. >> this one is different.

they are always different. doing was when you hit that bottom, even if you did not know it was the bottom, to be making significant investments reported just at the end of the first quarter, we invested $11 billion in securities. that is a happy outcome. to that.re in addition that is sort of the first stage. i think each of our businesses are seeing interesting opportunities. changing and is people are staying home, the areas you want to invest, whether it is technology or health care, are being modified.

older economies are bound to be disrupted. those economies are places where unless you have a really remarkable management, you want to stay away from. we could see different parts of the economy opening faster. some things were close completely, interestingly in the hotel business. one hotel in las vegas, completely closed the first weekend it opened. filled.5% that is astonishing. las vegas is fairly -- is barely open. there will be surprises. gradation, at the places you can drive will recover much faster. places you have to fly will

recover much slower. if you have to fly over oceans, those will be the slowest types of investments to recover. of our business investments is starting to put out money. our business lines. there is a much better tone. of private investing, there has to be confidence from both sides. the people who are buying think they are getting fair value. there is overlap. typically what happens if you are doing private investing, sellers don't like to sell at bottoms. you can buy liquid securities. you can buy things that are stacks where you can find the security where you think it has the most upside.

even if it is gonna pathway from where it started, some of these will continue to go up. others have already returned. issue ofinterest -- an figuring out which of the underlying businesses are going to return to health. now, the number of new coronavirus cases around the world has reached a record fueled by a surge in latin america. florida's new infections rose to another high in texas. greg abbott says the contagion was accelerating at an acceptable rate. that is the definition of the real risks. the chief economic advisor, martin malone -- those are live risks. they can escalate very quickly. for a i position

continuation of what is wave one of a pandemic? what is the evolution of wave one if it goes to a double shot down in major states? what does that look like in terms of the led trade? >> i think it does not disturb this trade. the most important factor we can see with increased cases, particularly in europe or america, i'm going to leave aside latin america, which is leading on these issues, but we need to delve into the detail. for instance, we need to check how much testing is positive. we need to test how many hospitalizations, we need to check how many icu beds are being utilized, and we need to check how much fatalities. all of those numbers i mentioned are not spiking like cases are.

we have to be quite careful when we jump into the market space about how we interact with that case increase. this is not the same as the first wave we saw in february, march, at april, where we saw a rapid acceleration. the health care system is upgraded to deal with these issues. the issues on ppn ventilators are significantly upgraded. ventilators are significantly upgraded. it is a totally different place than six months ago. we have to be cognizant of those issues. we are moving forward at quite an accelerated pace. that is without discussing diagnostics, treatments, or vaccines. nejra: it seems like you have conviction in a v-shaped recovery. what sort of return do you expect on that? >> the most important factor here is to consider what people did not expect.

we call it multiple paradigm shifts. if you remember, over the last few years, most economists and strategists and policymakers debated, if we ever have a recession, all 11 years without a recession, the longest period without a recession, there is no monetary space. there was no physical space or limited monetary and fiscal space. the monetary and fiscal space that has been used so far this year is 20% of global gdp. prior subjective views have proven to be slightly incorrect. or majorly incorrect. the basis of intervention is historically, we saw it in 2008, but this is much different. we do not have a financial crisis. we are getting monetary and fiscal intervention and risk assets have responded to that, and especially long-term

interest rates responded to that. our projection of long-term interest rates. your thing the market is watching for v-shaped recovery, vaccine, and victory across the u.s. election. with us.lone staying coming up, morgan stanley says gold remains underpinned by .ncertainty and trade tensions it holds near a seven-year high. ar high.

nejra: this is "bloomberg daybreak: europe."

morgan stanley expects gold to drip tire until the first half artan malonee -- is still with us. do you share that projection for gold? not a sustained gain? >> absolutely. gain in gold 25% up to 1750. is a flight to safety because of the global risks we have seen in the first half of this year. we are going to see what inflation comes out the other side of this. morning. host this length and duration, risk-taking. up, brussels versus

beijing. leaders criticize china over hong kong. we discussed the great china debate. ♪

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manus: good morning from dubai. this is "bloomberg daybreak: europe." here are your top stories today. president trump says the u.s. and china trade deal is intact. prices, -- heset says his remarks were taken out of context. open and eu leaders hold at the start of talks but there

is no joint declaration. new criticism of curbs to hong kong's economy is said to feature prominently. new global coronavirus cases reach a record. fueled by latin america, new infections in florida hit and other high while texas's governor says contagion is accelerating at an unacceptable pace. nejra: welcome to "bloomberg daybreak: europe." it is over. three little words, what a big move in markets. our guest of the hour says investors need to take a chill pill because u.s.-china relations are an issue that will last not just years, but decades. martin also points out we are at a different point in time. we talk about florida and the potential risks of the pandemic, but the health system in theory is in better shape to deal with

it. you are right, three little words is what has done the rally in. loose friends and an alienated president. is that what peter navarro has achieved? good morning. nejra: it shows the importance of words and perhaps the importance of the question. you and i know that because we ask questions everyday. you don't want to confuse a makeswith a question that them say something they will take back. martin malone also talking come you mentioned v-shaped and he said the three v's that will dominate potential returns, v-shaped, vaccine, and victory in u.s. elections. manus: led, length induration. overseas and begin. we are bit again. -- bi again.

injra: green on the screen asia and equities weren't shaken, but u.s. futures took the hit because we saw european futures also staying green through most of the session. manus: absolutely. schwartzman says we have a v-shaped recovery on the way. s&p futures, a trillion dollar round-trip. it was a 2% dump followed by a bear rally. the railroadt trade because you got the breakevens, you've got the actual real yields. i want you to focus on real yield, 10 year government yield -- no, we wanted the 10 year yield. the point is, the 10 year yield is going to be important to our guest, martin malone. having prices off of that including credit. dollar-yen also on the move and oil, down by .4%. reigns over trade.

the markets were roiled today, one, indices, futures, the the machinations were everywhere. it came down to the comments peter not our -- peter navarro had that sent futures in a tumble. dani: i want to take what you were talking about and put it into a picture into the charge because they say a picture is worth 1000 words and this shows how sensitive markets are to trade. you both mentioned how after the comments navarro made on fox radio dealbly the being over, he said it was taken out of context. look how every acid reacts. bwest futures come 10 year yields, and the yuan. the shape is remarkable. you want to talk about a v-shaped recovery, we got it this morning. the yuan is the first. he backtracks come you get a rebound, and the assets, the vix

did it as well. you can see volatility spikes at the beginning of the day. a lot of traders coming out, we have to take with a grain of salt what navarro is saying. we heard, put a muzzle on the sky. -- this guy. we are looking at lighthizer being one of the main forces driving trade. if anything shows, markets are quick to react, but they are also quick to normalize and get a bid back into these markets. nejra: and apparently even cryptocurrencies weren't spared from the volatility, so we did see a reaction across assets. thank you to our markets reporter dani burger. the european union and china spar over geopolitics and business practices. leaders from the bloc held videoconferences with the chinese president and premier. let's get more with our reporter in brussels maria tadeo. the summit ended without a joint

communique. what is the significance of that? maria: it is actually very significant when you have a summit like this where you have xi jinping, ursula von der leyen on to the call and they are not able to put together a document by the end of the session. what he shows you is the two sides were far apart on the meeting on key issues going from politics to business practices. the europeans are not liking from china this point. what is even more striking is yesterday, we didn't get a joint statement but a year ago, we got one from europe and china. it shows you, we've talked about this many times, the mood in europe when you look at china, the business practices, the dumping, the use of subsidies in europe. , the europeans are worried about this. . change in the tone is. significant and it shows there is push back from european institutions and from brussels and the commission. anna: -- manus: good to see you back on

our screens. let's talk about the summit. it went on for an hour -- went on for hours. a number of topics, but if you had to define the straw that broke the political camels back, where was the tension? the problem is there were too many and that is become the issue. it is not just one problem. you have a situation going on in hong kong. the european parliament condemned china about that. the chinese are not happy about that. they view this as an interference, but for european institutions, this is key because the criticism of china is actively trying to undermine the one nation, two systems. we also have business practices. have complained for years that european companies do not get equal access into the chinese market and some of the chinese backed companies, the way they operate in europe could be seen as predatory behavior on european companies. many issues here.

on top of that, factor in coronavirus. europeans have not blamed china, but they have said for a while, there was misinformation coming out of china. all of this coming together yesterday made not only a tense summit, but it ended with no joint conclusions. nejra: our reporter maria tadeo in brussels. let's get to the first word news. president trump says the phase one trade deal with china is fully intact. that follows confusion over night comments from his trade advisor. peter navarro spoke to fox news indicating the deal was "overcome" but walked back the comments saying they had nothing to do with phase one deal and were taken out of context. u.s. for af the stunt at nuclear talks. marshall billingsley tweeted china is a no-show alongside a photo of chinese flags and empty chairs.

beijing hadn't been due to take part and its arms official commented it was an odd scene adding, how low can you go? russia also condemned the move. softbank is selling stake in t-mobile in the $21 billion push byrt of a broader the conglomerate to unload assets to finance buybacks and pay down debt. the company is dealing with steep losses after writing down the value of investments including wework and uber. before its recent scandal, wirecard explored a deal to enter the financial elite. the payments company considered a tie up with deutsche bank and approached the lender with the idea. deutsche bank quickly and the preliminary talks while the bank had more than $1 trillion in assets, its market value was less than wirecard in april. global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. at what isa look happening today. 9:00 a.m. london time, the

eurozone's culinary pmi readings for june. boris johnson will announce relaxingeasing plans, of social distancing rules is expected to be the main point of discussions. manus: indeed. reading of u.s. pmi for june will hit the tape at 2:45 u.k. time. 15 minutes later, the latest new-home sales figures. will there be a rush across the doors? and the bloomberg invest global summit continues throughout the day. implications of stimulus deployed during the pandemic. let's look ahead to some of the big interviews that will be crossing the terminal throughout the day. pimco'sime, we will see ceo followed by the carlyle group's co-ceo, and finally, the treasury secretary steve mnuchin with david rubenstein.

a feast to listen to. expected toohnson give the green light to cinemas, theaters set to reopen. how will the u.k. kickstart the ailing economy? we will discuss on bloomberg. ♪

nejra: this is "bloomberg daybreak: europe." i'm nejra cehic in london. let's get a look at the risk radar. confusion over the trade deal -- it is over, no it is not, futures tumbling 1.6% overnight. they've recovered, but european futures have remained resilient through the asian trading session.

that isstrengthened, retreating so you are seeing risk on come back but oil stays lower, weakening from a three-month high. manus: indeed. those are the markets. let's focus on the u.k. economy because we are in reopening mode. the prime minister is expected to give the relight -- green light to open the cinemas later today. former chancellor's weight in on how to boost growth. infrastructure spending, and you have alastair vat woulde says cut be a boost to consumer spending. let's put that to martin malone. , alistair darling, cut vat. it is a very different time in terms of behavior. would it make a material difference to an economy that really has literally fallen off

a cliff? think it would make a material difference. the issue is to reset and reset with some fairly aggressive action and the action must take place in the investment area, not in the consumption area. to put that in perspective, investment with regards to the economy on average since world war ii is about 2% or 3% per year. investment was negative in 2018, was negative in 2019, and is -12% in 2020 because of the events. that is three years of negative investment. the major economic damp in the e, ands investment hol that has to be the government's focus. nejra: let's talk about the bank of england's focus. himboe governor protocol for bloomberg yesterday where he

talked about wanting to shrink the balance sheet before rate hikes and the speculation globally in markets, but also in the u.k., about yield curve control. bearing that in mind and the fact there was some discussion after the column yesterday about money market funds being examined in the u.k., what would be your fixed-income strategy in the u.k., looking at gilts and credit? martin: quite similar to america, and that is we have to have probably the long duration trade on as much as possible and we have long credit spreads as much as possible and this debate at the bank of england between balance sheet and interest rates and how to exit emergency policy settings is one we always debate. america debates this, the japanese debate this, and that is going to be a topic we keep coming back to.

but the major focus for investors is to have the highest duration they can have and the highest credit exposure. as you can see, the bank of england is purchasing credit and that has given tailwind to those credit spreads, so increased risk-taking in the fixed-income space is duration and spread. in the u.k., they've got more duration to choose from, mr. malone, don't they? they've got a longer curve. martin malone from alphabook, our guest host. one of the world's biggest sovereign wealth funds, we chatted about investment strategy. areas the fund is interested in and the allocation of capital. bloomberg middle east virtual conference. >> we have taking a few a couple

of years ago that we have to start shifting our portfolio we wereditional sectors good at and had a very diverse portfolio in, but as we look at the future, we need to be much more exposed to technology in all its facets, and that is what we have been trying to do over the last couple of years and to be honest, i feel with a high level of confidence, we are on the right track. life sciences, artificial intelligence, these are areas within the broad technology sphere and that is the space where we felt pre-covid, that is the place to go, the arena for us to build experiences, expertise, and deploy significant capital. we started that journey pre-covid. we are continuing that journey during covid, and certainly, i

think you will see mubadala over the next five years, more and more be a far more sophisticated technology space investor and across all its aspects. >> let's did more into that, because the various conversations i've had, people said to me tech is expensive. they are referring to the big verbose tech at the top of the but valuations, we have gone from despair, recession, depression to euphoria in 100 days. my question to you is due valuations look rational? does any of it concern you? is there a level of irrationality potentially in these markets or is that too negative of me? >> no, i think there is high valuation in the market and if you look at the u.s. market right now, in my view, it does not reflect the reality of the

macro situation we see in the u.s. and in the world, so i think there is generally in the market. having said that, quality is up and quality companies and quality assets today, tomorrow in the years to come will hold their valuations. i think at the end of the day, it is about quality. it is about quality and quality justifies violations, and that is how we look at things from a mubadala perspective. i think it is important for us not to just look at the western market here. the united states or europe. one of the things we have been careful about in the last couple of years is expanding our horizon in asia. we've been looking at markets like china, like india, southeast asia and finding the

right opportunities there in the a couple like, which of weeks ago, we made a significant investment in india, which is a good example of what i just described. , a countrywe like wee india in a sector anticipate will grow in the future. that is the sort of thing we like and at the end of the day, valuations are high, but quality will justify this in many places. nejra: that was mubadala investment company ceo khaldoon al-mubarak. coming up, a timeline for the recovery. we hear from financial and economic thinkers at the bloomberg invest forum on monday. that is next. this is bloomberg. ♪

v in terms see a big of the economy going up for the next few months because it has been closed. >> i think we are going to begin a recovery certainly by year-end. i don't think we will be close to a normal economy until the second half of 2021. >> you are going to have a third quarter that is going to be stronger than the second quarter. the second quarter will be like the trough. there will be some progress. it is going to look like there is recovery, and there is going to be some expectation, some enthusiasm. >> the market is fragile and , at that little something wobble people aren't ready could provide the stimulus.

nejra: some key figures at the invest forum monday with their outlook on the shape and timeline for in economic recovery. martin malone, chief economic advisor for alphabook, is still with us. book recovery trades are you putting on? the major focus for investors should be what the second half of this year is going to bring. the numbers should be very good and also what 2021 is going to bring. the pricing structure of both currencies, bonds, and stocks is really going to be future pricing structure rather than getting caught up in the day-to-day issues. that is a little bit difficult for most traders. the time frame you have for trades must be a little longer and unfortunately, we will have to deal with the volatility. structurally, we are quite bullish and i think we described it over the last half hour. we seein bullish unless

new destabilizing factors that we are not expecting. manus: martin, can i pick up on the team from khaldoon al-mubarak at mubadala? he talks about tech, u.s. tech. 24% ofch in the u.s. is the index. are you worried at all in any way about a dislocation in terms of capital to tech? martin: not at all. i think basically if we look at the top 10 largest stocks in america today, they are a little over 20% of the entire market. we can see that these are as high as the tech bubble in 2000, but we would have to go back to the 1970's. that is also a little too short term.

if we go back to 1930's to 1960's -- manus: martin, we are going to have to take the history lesson the next we get together. martin malone, chief economic advisor at alphabook. time is never enough on "bloomberg daybreak: europe." ♪

>> good morning. welcome to "bloomberg markets: european open." in londonedwards alongside matt miller in berlin. matt: the markets say do we have a deal or not? mixed messages from the trump administration. european futures point to a positive open. the cash trading is one hour away. that's get your top headlines from the bloomberg terminal. it is still