>> european stocks turn lower, with u.s. futures, as equities limped towards their best week in a month. that follows a better-than-expected u.s. jobs report. u.s. markets are closed for the holiday. coronavirus cases in the united states jumping the most since early may. testing centers across the nation jammed as officials advise the safest thing to do is stay home for the holiday weekend. shakeup in france. prime minister edvard philippe resigns. a warm welcome to this special edition of "bloomberg markets." live from london, i'm anna edwards. european markets stumbling towards a decent turnout for the

week on the hole for global stocks. let's get a first word news update. here's leigh-ann gerrans. leigh-ann: president macron of france has appointed a new prime minister. macron is preparing to reshuffle his government in the widely expected relaunch of his presidency for the final two years of his term. north korean leader kim jong-un urging people to stay alert of coronavirus. he warned that complacency could lead to unimaginable and irreversible crisis or get despite the warning, he has reaffirmed north korea's claim to not have had a single case of covid-19. this is widely doubted by global health officials. european president christine crisis's signature

fighting tool is becoming the focus of disagreement among policymakers. governing councilmembers face a potential risk over how much their emergency bond purchase program should stay weighted toward weaker countries such as italy. that is according to multiple conversations with central bank officials. and hong kong, police have charged a 24-year-old man for inciting secession and committing terrorist acts. those are the first charges under the newly enacted national security law. he was accused of violating their national security law as he drove his motorcycle which sported the slogan, "liberate timesong, revolution are ." 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. i'm leigh-ann gerrans. this is bloomberg.

thank you very much. in's show you where we are global equity markets. holiday filinge tomorrow, meaning markets are closed today. without the liquidity from the united states, this is what we have today. european markets are down around 0.5%. we are at the midway point of the european trading day. a little bit more than that on the ibex in the ftse mid, so in the peripheral markets of europe. in terms of sector on the move, oil and gas is one of the weights on our markets today, oil prices down by 1.3% on brent. the euro against the dollar not moving greatly, $1.1233. we will get to that later on in the program, given the french developments and the latest news

flows surrounding the ecb. just how much flexibility the ecb should have in its latest bond buying program. national economic counselor -- white house ash economic council -- directorc kudlow larry kudlow said china is a huge problem, but the white house continues to engage with beijing on trade. all, it is first of a spectacular number, and it helps the overall situation enormously. key point.lly the we've created a lot of jobs in the last couple of months, and the trends continue. i was listening to that earlier conversation. i don't think people understand the rescue package that the president led with bipartisan support in congress and the ppp that secretary mnuchin fostered and implemented, it is the temporary layoffs, the furloughs that are coming down.

we kept people connected to their employers. they did receive assistance. but we kept them connected so that as the economy reopened and businesses reopened, roughly 80% of small businesses reopened. unemployedy 63.5% of are now temporary workers. that number was 75% to 80%, and it was 7.7 million. i don't see why that trend can't continue. that's the point i am making. a lot of temporary layoffs will go back to work. jonathan: i think a lot of people believe you can't extrapolate this out too far. many people think more help is needed. this is what the president had to say in the last 24 hours, when he was asked about more direct payments for individuals. , but it "i support it has to be done properly, and i

actually support more than the democrats." mr. kudlow: i don't think a final decision has been made at all. the president has always favored that, but he wants it done in a very smart way and a targeted way, so i think the shape of any kind of package is still very much up in the air. he has emphasized a number of programs. negotiations won't formally begin until after the july 4 recess. he's talked about payroll tax cuts. he's talked about reemployment benefits and bonuses because we on't like the $600 unemployment. it is a disincentive to work. he's talking about the tourism industry, the entertainment industry. he's talked about capital gains. he's talked about investment write-offs. there is to a very large package here. we won't know until we go into this negotiation. so he's right.

everything is on the table. many things are on the table. it is just a question of shaping it, and do it smart. i thought the original rescue package was very smart. i don't know if everything has to apply all over again. we will see. we assess the economy. evidence what is the that the enhanced on them limit benefit has been a disincentive to return to work -- enhanced unemployment benefit has been a disincentive to return to work? mr. kudlow: i can only give you anecdotal evidence. so many business people have said to us, particularly the smaller businesses, particularly the most vulnerable to the pandemic, the restaurants and small stores and shops, they can't hire people back because the unemployment benefits are very generous. that theto think generous unemploymen package was probably a good thing at the beginning of this

pandemic, when we put it on the table in march. working with payroll protection, i think the unemployment compensation could be a good thing. but now that moment has passed. we are moving into the reopening, and spectacular jobs numbers. people are starting to move back. i thing we have to look at this a little differently now. i think reemployment benefits probably will help fill the bill, and those have to be targeted to the right people who may be have had trouble getting . job or competing it will be more manageable. they will be able to afford people. that is the key point. anna: with the u.s. national economic council director larry kudlow, speaking to bloomberg after the jobs report yesterday. joining us now is kristina o chief global

market strategist. let me ask you about the jobs report firstly, and what difference that makes to your investment strategy. there does seem to be some debate, as you heard from larry kudlow and jon ferro, as to whether jun means anything in terms of the trajectory of recovery in the u.s., given that since the june numbers were taken, we have had to see the pausing of reopening measures in a number of states. kristina, can you -- no, it looks as though she cannot hear me, which is a shame. i will just give you an update on european equity markets, then. we have seen some enthusiasm in yesterday's market session in the u.s. around the jobs report we heard about from larry kudlow

. there was quite a lot of enthusiasm because the number was much better than anticipated , although there was a huge range of expectations out there, a really staggering range, but the number was good, so markets went higher initially, but then they did seem to come off a little bit as people started to ask whether this meant there would be less room to stimulate the economy. you see european equity markets picking up on that. the stoxx 600 down by 0.4%. the ftse 100 down around 0.9%. the cac 40, with all of the politics happening in france, we will talk about that later on, but we are down by 0.6%. see someioned, we do heavier selling in the periphery markets of europe. just a look at was going on sector wise for european markets , we've got the sector picture for european equity markets on the stoxx 600, i can see oil and gas is one of the weights on the

market today. rent prices falling, down by just over 1%. not as much as we were just a half an hour or so ago. , all ofsources, autos those sectors losing ground. stocks up around 0.5% , and we see a slightly different trajectory for the nasdaq in terms of the u.s. futures. we've got the nasdaq futures looking flat to positive, where other u.s. futures are negative. remember, it is not the fourth of july, but u.s. markets are shut today because of the independence day holiday. let's get to another story this morning. -- chilean copper producer expects to stay within its production guidance this year, even as the covid-19 pandemic keeps more than 1/3 of staff off-site. the ceo spoke to bloomberg's shery ahn.

>> i think what's happened is that some part of that workforce has actually moved to teleworking, so they are supporting the operations in performing the roles, but doing that from outside the actual site. from that point of view, they are fully integrated. because we've got lower workforce, some areas can be affected. -- mineelement development is one, and then some maintenance work. we are trying to find ways to teleworkingest in and gradually returning the rest of the workforce. we think we will manage this. the expectation is that in a month, maybe a month and a half, the number of cases should start coming down. we are starting to see some of

that in the country, but it is very early days. until we see that consolidate, we will have to continue to operate in this mode. shery: how confident are you that you will be able to achieve your annual production guidance ? >> our plan is to be able to a compass that -- to accomplish that. to the extent that we can continue to operate in the safeway we are doing today, even though we've got 35% of the workforce supporting for teleworking, i think we should be able to manage to achieve the range of production we guided the market to. we do expect some impact, and we have indicated that is probably in the vicinity of 2% lower production to the one we had , but if wecovid-19 don't stop our operations, we think we are going to be able to essentially meet our production

plans. shery: what would factor into a decision where you have to stop operation? >> obviously the sanitary condition is what mandates if we continue to operate at current rates. rates.

anna: this is -- leigh-ann: this is "bloomberg markets." softbank shares rose today to a new high for 2020. the stock is being propelled by a series of buybacks that have

seen the stock recoup the losses suffered during the coronavirus crisis. the recovery is something of a vindication for the ceo after he unveiled plans to sell ¥4.5 trillion of assets to reduce debt and bankroll record share buybacks. now after six years in japan, uber is finally hitting the road in tokyo beginning today. theright company is -- ridesharing company is partnering with cap makers to make 600 cars available. -- ise beverage giant waiting an initial public offering that could raise more than $1 billion. bloomberg has learned the listing could come as soon as next year. wahaha has grown into a food and beverage giant. it's products are available in more than 30 countries, including canada, singapore, and the u.s. that is your bloomberg business

flash. much,thanks very leigh-ann gerrans, with your business flash news. headlines for investors is coming from the united states and other parts of the americas. let's get the global perspective. tarik jasarevicy of the world health organization. we have seen some of those southern and southwestern states in the u.s. where we see outbreaks, for example, texas, now saying that masks should be worn. do you think the u.s. is now moving in the right direction on that subject of masks? countryell, every around the world is looking at its own situation, trying to evaluate and analyze the state of the epidemic in the

particular area, and trying to find the most appropriate guidance to its population. every authority around the world is trying to do the best in the spend my. it is time for all of us to reevaluate the lessons we have learned and to find a with forward by committing to continued research and development. it is important to understand the guidance given by your local and national health authorities and support those. we try our best to gather the ways toand provide issue appropriate recommendations. what is the road or health organization -- what is the

world health organization's view on how effective masks are? tarik: we were always saying from the beginning that masks are just one element that can .e used it has to be accompanied with maskwear a fabric by general community, who says there is no possibility to keep this minimal safe distance between people.

anna: let me ask you about one of the drugs being used to treat the sickest patients, remdesivir. there does seem to be a bit of a global race, with many nations competing with each other to try to get a hold of stocks. is that something that worries the world health organization? tarik: currently there are a number of trials going around the world, including our own trial where we are looking into a number of existing medicines, and remdesivir is one of them. we are gathering the data. we are trying to get as many evidence from around the world, from many hospitals around the world that are doing those eventuallyhat we can have some results. obviously, when it comes to medicines as well as vaccines, there is work being done to ensure that there is equitable access for everyone, and there is distribution that keeps into

account that everyone should benefit from these solutions that are eventually something that we all need. anna: yes, i know that you have been working on that. whate subject of vaccines, is your timeline expectation now for vaccines, if one proves to be effective? there'shere is 100 -- 150 vaccines currently in development. 17 are in trials, and they are all using different techniques, so we really hope that one, or even better more of them, will prove to be safe, but not only efficient. we would like to see these developments the next 12 months, so by 2021, to be able to enter

into the production of a vaccine , once we make sure the vaccine is safe and efficient. tarikthanks so much, us for thejoining latest on the fight against covid-19. let's get a check on the markets now with bloomberg's dani burger. good morning. dani: goodningni: -- morning. we are looking at european stocks limping into this last day of the week, down by about 0.5 percent. it is really value stocks leading those declines, so a lot of banks doing poorly today. momentum is rallying to the other side. speaking of momentum, look at what nasdaq futures are doing versus the s&p 500. they are barely changed, while the s&p sinks. futures show the increasing divergence for tech.

switching up the boards, currencies have barely been budging all week. . today is no exception, despite the u.s. jobs data. they need something more concrete to sink their teeth into. cable slightly lower. the u.k. prepping for bars to reopen. brexit negotiations still continuing. crude lower by 1%, still heading for again for the week -- heading for a gain for the week. anna: thanks very much for a quick look at the markets there. dewpoint in a slightly different direction, even though we won't see trade today because of the fourth of july holiday. and i said good morning out of habit to dani burger. a busy afternoon here in london, in case you are also here in london, and we are a bit confused by that. --ing up, will thing

u,ming up, wolfgang muncha president of euro intelligence. this is bloomberg. ♪

♪ ["1812 overture"] ♪

anna: join bloomberg for our annual broadcast of the boston pops, from the comfort of your own home wherever you are

around the world. starting at 9:00 p.m. new york time on bloomberg television, radio, and bloomberg.com. let's check in on the bloomberg first word news. here's leigh-ann gerrans. leigh-ann: french president emmanuel macron has named jean castex, who coordinated the coronavirus reopening strategy, as the country's new prime mr.. he replaces -- new prime minister. he replaces edouard philippe, who resigned earlier today. many government members are expected to be replaced in a reshuffle. president trump heads to mount rushmore today for an early independence day celebration. 7000 ticketed guests are expected to gather. they will not be required to wear masks or socially distance. south dakota's governor says if people have concerns about catching coronavirus during the

event, they can stay home. british prime minister boris johnson says the u.s. government hasn't approached his administration to request an with prince andrew over his alleged ties to jeffrey epstein. he would not say whether britain would comply if such a demand was made. --everybody's --pm johnson: everybody's sympathies are very much with the victims of jeffrey epstein, but i would not become it on the royal family. -- would not make a comment on the royal family. leigh-ann: lawyers for the prince say that is not true. friend juliegtime maxwell -- longtime friend

ghislaine maxwell was arrested tuesday. 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. i'm leigh-ann gerrans. this is bloomberg. anna: let's pick up on one of , french president emmanuel macron appointing jean castex to be his new prime minister, seeking to inject momentum into his presidency following disappointing municipal elections. eurointellighau, ence president, joins us now. we want to talk to you about develop it's in the euro zone, but i want to get your response about the reshuffle taking place in france. do you think this is something that was needed? does emmanuel macron need to reboot his presidency in some form? wolfgang: yes, absolutely. we have been expecting this to

happen for some time now. prime minister edouard philippe has been very popular. it is one of those countries where the prime minister is more popular than the president. it doesn't happen very often. he was outshining the grand master. right, is also on the wantscron -- and macron to shift policy to the left, so he will need a different team. that also raises the possibility of philippe possibly emerging as a rival to him, possibly even before the next general election. that depends very much on how macron's reboot is actually working. but the shift to the green is necessary for macron because we

saw in the local elections that they won some of the races better than expected, and they were already expected to have very good results. anna: which is an interesting development when you consider merkel have been talking a lot about the rescue bailout funds for europe, and it does have great objectives attached to it -- does have green objectives attached to it. is their ability to push this through in europe? is there anything that links the two, or is that a separate train? wolfgang: completely separate. macron has the majority in his parliament. he can pretty much do what he likes. so does merkel. she also has the majority of germany behind her on the recovery project. that wasn't the case before, so she has taken the plunge with

him. philippe would not have opposed that. that was not the issue in french politics, the spending commitment. that is not really disputed. it will be disputed not so much in france, but all over europe. for example, if you give money to italy, the original proposal by the commission to give 80 billion to italy over four years , but link it to green investment, that won't be so easy. they will probably want to spend it on other things. that is where the conflict in the recovery will happen. but i don't think the conflict will arise inside france. so micron -- so macron has carried merkel along with him on this, and i expect it will go in a somewhat reduced version so that the so-called frugal four countries will manage to reduce

the size of it. yes, and with that in mind , i suppose as we watch the euro zone economy recover, that plays in two directions. it is a positive if the economy recovers, but it might also increase the weight behind the argument that the frugal four who oppose the size and scope of the steel. wolfgang: exactly. what their gameplaying is -- what their game plan is is to play for time. the netherlands are already saying they are already saying they're willing to compromise, but it is not going to be easy. they want the deal done after the holidays. thehat point, you will see recovery garnering pace. , forill be seeing that example, the bank of england saying the recovery is actually quite strong.

the european recovery is perhaps not quite a strong, but it is stronger than they thought it would be. if this pace of recovery continues into the third quarter , we may well see enthusiasm for this recovery because we have seen a lot of money here. have seen enthusiasm at least among the conservatives. anna: let me ask you about the ecb and its pepp program, the bond buying program. there does seem to be some tension burrowing over the amount of flexibility that should be given to diverge from key toomp -- the capital support weaker parts of the euro zone. do you think that is something that is going to cause tension? wolfgang: i would definitely look at for that. the capital key is quite important. there is no dispute over whether

you can temporarily deviate from it. it doesn't have to fulfill with every single bond buying action. but the idea of the capital key, the capital key serves the function for the ecb to demonstrate that this is a pure monetary operation. to bailoutea is not some country, but to raise the rate of inflation. that is the official meaning behind those programs, and if you deviate from the capital key in buying the debt of one country more than another, people will start to question, and locals will start to question, including the ecj, whether this is really fulfilld the requirement -- whether this really fulfills the requirement of a pure monetary transaction. in the german constitutional court, critical though it is of the ecb, at this stage has not

declared the program illegal, but if you deviate from the capital key come i am absolutely sure that will happen. anna: thank you so much, wolfgang munchau of eurointelli gence. from the campaign trail to the halls of congress, america's wealth gap is a frequent topic. but less than a century ago, things look very different. bloomberg's david westin has more. ii, thefter world war united states embarked on a path toward income equality at the top 1% of earners lost asa can share of the nation's income. in the early 1970's, the nation took an abrupt turn and how earnings are distributed. today, america has the highest level of wealth inequality among all of the g7 nations. theme tax data shows

average salary for the bottom 99% of american families roughly doubled from 1945 to 1973, while incomes for the top 1% grew by just over 1/3. 2007, the73 and bottom 99% saw income growth of only 15%, while income for the top 1% more than tripled. race plays a large role in economic inequality. the pew research center found that in 2016, the net worth of a typical white american family was 10 times that of a typical black family. the recent economic downturn will likely make things only worse. during the last recession, the median net worth of black families declined more than that of white families, while white and asian americans out earned black and hispanic americans on every wrong on the up atomic latter -- every rung on the economic ladder. trends in inequality aren't

likely to stop anytime soon. the congressional budget office predicts that incomes will continue to grow for the 1% through 2021, boosting the cumulus growth -- the cumulative growth to 181% over the past 21 years.- the past 41 of july, therd market holiday before fourth of july tomorrow. the bloomberg special "unequal america" looks at economic equality in america and how it may play into the november election. that is on bloomberg tv. european equity markets are on the back foot this morning -- this afternoon, i should say. we are well over halfway into the trading day in europe. stoxx 600 down by 0.7% right now. the ftse 100 is a bit of a laggard, down by 1.2%. i don't see the pound making any

great moves, but we have some big names in the u.k. like rolls-royce losing ground. that stock is down 5%. on this special edition of "bloomberg markets," more to come. this is bloomberg. ♪

♪ leigh-ann: this is "bloomberg markets." boeing is pulling the plug on jet, endingo

production after a half a century run for the twin aisle plane. the decision hasn't been reported, but sources have it worked out from subtle word changes in the company's financial changes. despite the popularity with travelers, the final version of the 747 never caught on commercially. citigroup is unlikely to bring more than 40% of workers back to the office until a coronavirus vaccine is available. the bank has 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. elon musk is again taunting the securities and exchange commission. while commenting on twitter about tesla's surging share price, he started joking about short-sellers. he then referred to the regulator as "the short seller enrichment commission," a phrase he first used in 2018 after the

sec sued him for securities fraud. that ended in a settlement agreement. that is your bloomberg business flash. anna: thanks very much for the update. ray dalio, founder of the world's largest hedge fund, says recent central bank actions mean capital markets are no longer free. he spoke with bloomberg's erik "bloomberg front row." >> today, the economy in the markets are driven by the central banks, and the coordination with the central government. what i mean by that is the purchases right now of financial assets by the federal reserve or the purchases by the federal reserve of government securities are the drivers of markets. so if you look at money and you

look at who is in the markets, the, for example, will set an forrest rate that, different type of creditors based on economic objective. needed to protect banks because they were systemically important, in commercial paper and the like. now the whole economy is systemically important. if they didn't go out and make lending to companies, including thatwe call fallen angels were just above investment grade and fell into investment-grade, we would lose large parts of our economy. so we are in a situation now where they are the market makers. take the market out, take the central banks out, and you have a different story, including the

value of money. what is the value of money? think about it in europe, for example. the central bank will lend to banks at -1%. so that means you don't have interest payments. in fact, you have interest credits. andy central banks will take that debt on. they will own it. and they have a political agenda, not an economic agenda, in which they will determine whether they will be paid back or when they want to be paid back based on how the economy is doing and what will happen. so in that case, like the example in europe and similar situations in the united states and japan, to varying degrees, they will make loans that have interest credits almost, or let's say zero, and you may not have to pay principal back. it depends on what the conditions are at the time. those are markets which are

, notn by central banks only their actions, but their desire to be an owner of those assets, and their priorities about that ownership when they buy and when they sell are not the same as the classic three market allocations. as a result, the capital markets are not free markets allocating resources in the traditional ways. questionsof the investors are wrestling with is how far central banks are willing to go to reflate central financialreflate assets, and hope something translates through to the real economy that would result in growth and jobs. how far are central banks willing to go with this power they've discovered they have? ray: central banks are willing , as far asneed to go

it takes in order to keep the system afloat, and because we are in this late stage where we have a lot of debt, you are going to see central bank balance sheets explode. they have to because the choice is a sinking ship. anna: that was bridgewater co. cio and founder ray dalio. certainly not the only conversation i've heard about whether markets are broken. have bucked the trend of poor returns as other funds were punished during the downturn. >> this is a group that has outperformed the market this year. for those unfamiliar, tiger clubs are hedge funds whose

founders are alumni of the fund tiger management. the s&p 500 has fallen so far we percent, -- so far 3%, but we inve seen tiger global ga 17% year to date. ones was liketer tree capital, gaining 36% year to date. they also have a technology bend. a little bit of a theme going on for these funds. many of them are tech based, which is help them beat the market. again, u.s. stocks are down 3% for the year, so this is a remarkable feat for these funds, especially given that correlation is still high in the s&p 500. really the sure way to outperform for a lot of these managers has been bet on tech. to the gains of

these businesses fit with other hedge funds that have struggled? we talked about sir john paulson and his conversion into a family office. dani: it is a really difficult environment, and i think you either need to be able to deal or not. volatility it is really all about tech as it seems most of these funds have that tech bias. but if you are a manager who can't just get down and hugged the benchmark, you would have lost money. anna: thanks very much. dani burger with the latest on the hedge fund community. european stocks, one hour into this special "bloomberg markets" for the third of july, u.s. markets are closed. elsewhere, pretty risk off. u.s. futures are flat to negative. the flattest of them all is the nasdaq, as it does seem as if

tech is going its way a little bit. coming up at the tops of the next hour, we will talk to zief, head of fx strategy at jp morgan. this is bloomberg. ♪

♪ anna: european stocks turn lower. u.s. futures fluctuate as global equities limp towards the best week in a month. that follows a better-than-expected u.s. jobs report. u.s. markets are closed today for a holiday. coronavirus cases in the u.s. jumping the most since early may. testing centers across the nation jammed as officials advised the safest thing to do is stay at home for the holiday weekend. shakeup in france. prime minister edouard philippe

resigns as president macron seeks a fresh start, appointing jean castex as the new prime minister. good afternoon from london. i'm anna edwards. this is a special edition of "bloomberg markets." it is not july 4 just yet, but it is a market holiday to celebrate july 4 in the u.s. thisut the u.s. volume in equity market, they are leaning to the downside in europe. here's leigh-ann gerrans. leigh-ann: french president emmanuel macron has named jean castex, who coordinated the virus reopening strategy, as the country's new prime minister. the relatively low-profile castex replaces edouard philippe, who resigned today. macron is reshuffling the government. many members are expected to be replaced in the reshuffle. tomorrow is super saturday here in england. cinemasnts, hotels,

will get to reopen three months after the start of the coronavirus lockdown. prime minister boris johnson is urging people to act responsibly, warning that the u.k. is not out of the woods when it comes to the coronavirus. and hong kong, police have charged a 24-year-old man for inciting secession and committing terrorist acts, the first charges under the new security law. he was accused of violating the law as he drove his motorcycle which sported the slogan, "liberate hong kong, revolution of our time" into officers, injuring several of them. prince aides of saudi bobbitt been some on -- saudi prince mohammed bin salman are being tried for the murder of

jamal khashoggi. 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. gerrans.-ann this is bloomberg. anna: thanks very much. european equity markets certainly making moves to the downside. stoxx 600 down by 0.7%. -- u.s.amount of that 0.4%,s are down between and around the flatline. the oil price is retreating a bit, waiting on stocks. down by 1.3% on brent. a quick look at the euro, down

0.12%. in france, we had a reshuffle of the cabinet. a new prime minister being appointed as a reboot comes through. questions being asked around the ecb and its pepp bond buying program. questions coming through, saying the ecb is more confident .ow and its baseline scenario we will bring that into our conversation as we go through the day. the national economic film the national economic council director larry kudlow says china is a huge problem, but the white house continues to engage with beijing on trade. kudlow: first of all, it is a spectacular number, and it helps the overall situation tremendously.

we've created a lot of jobs in the last couple of months, and the trends continue. one thing i was listening to that earlier conversation, i don't think people understand the relationship. the rescue package that the president led with bipartisan support in congress and the ppp that secretary mnuchin fostered and implemented, it is the temporary layoffs, the furloughs that are coming down. we kept people connected to their employers. they did receive assistance, but we kept them connected so that is the economy reopened in the business is reopened, roughly 80% of small businesses reopened. we saw it again today. 63.5% of unemployed now are temporary workers. that number was 75% to 80%, and it was 7.7 million. i don't see why that trend can't continue. i am not sure there's an intellectual disconnect, why

that trend can't continue. a lot of temporary layoffs will go back to work. jonathan: i think a lot of people believe you can't extrapolate this too far. many people think more help is needed. this is what the president had to say when he was asked about more direct payments are individuals. "i support it, but it has to be done properly, and i support larger numbers than the democrats." that sounds like the president has made a decision. is that a fair characterization? mr. kudlow: i don't think a final decision has been made at all. the president has always favored that, but he wants it to be done in a very smart way and targeted way, so i think the shape of any kind of package is still in the air. he has emphasized a number of programs. again, negotiations won't formally begin until after the recess, the july 4 recess. he's talked about payroll tax

and reemployment benefit bonuses because we don't like the $600 plus on unemployment. it is a disincentive to work. he's talked about helping the restaurant industry, the tourism industry, the entertainment industry with better business write-offs. he's talked about capital gains, investment write-offs. there is still a very large package here, and we won't know until we go into this negotiation. so he's right. everything is on the table, or 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 don't know if everything has to apply all over again. we assess the economy. that is the key point. jonathan: what is the evidence that the enhanced unemployment benefit has been a disincentive to return to work? mr. kudlow: right now i can only give you anecdotal evidence. a lot of us here this. this, secretary mnuchin,

jean scalia at labor. many people have said to us, some of the most vulnerable to the pandemic, they can't hire people back because the unemployment benefits are very generous. i happen to think the generous unemployment tactics was probably a good thing at the beginning of this pandemic, when we put it on the table in mid-march and late march. program,ith the ppp payroll protection, i think it could be a good thing, but we are moving into the reopening, and as the numbers show spectacular job numbers, people want to go to work. so i think we have to look at this a little differently now. i think reemployment benefits probably will help fit the bill, and those have to be targeted to

the right people who maybe have had trouble getting a job or competing with the unemployment $600. it will be a better story for the small businesses. they will be able to afford people. that is the key point. anna: that was the u.s. national economic council director larry kudlow, speaking to jonathan ferro here at bloomberg. u.s. markets are closed today. jpng us now is sam zief, morgan global head of fx strategy. sam has held a number of research and policy positions at the fed. great to have you with us. we heard there from larry kudlow and my colleague jon talking about the possibility of further physical support for the economy. does the dollar respond much to that kind of fiscal support, or does it get lost in its role as a safe haven? >> thank you very much for having me.

it does seem like the dollar these days is more responsive to the global growth narrative we had some good news out of the u.s. labor market yesterday, and still the dollar's initial reaction was to trade weaker. we think is the global economy continues to recover in the u.s. labor market continues to recover as well as the rest of the globe, that the dollar should trade a bit weaker. we think we have seen the peak in the dollar and we are going to be a bit weaker from here. anna: you managed to find parts of the fx vector not correlated with the risk on/scott phenomenon we -- risk on/risk off phenomenon we seem to see. samuel: it is actually very difficult to find that, really riskver the fx spectrum. for our outlook, it is really important to keep an eye on what risk sentiment is doing, what broader equities are doing, and

we think that will lend a downward trend to the dollar. the only thing that doesn't seem to be highly correlated, and that could really benefit in this environment, we see is gold. some people call that a currency. we call it a commodity -- some call it the commodity. we tend to see it as another reserve currency. anna: we have seen a lot of news around french politics today, a new prime minister being appointed. if that something that will cut through the euro, or is the euro buoyed by all of the joint thinking by members of the euro zone? samuel: we do think the joint thinking moves towards fiscal integration, particularly with the eu recovery fund. does have the potential to be a real game changer in the euro area. assets have had to be assigned some risk premium by global investors because of political divisions. there's always been some risk

that the euro zone breaks up, even if it is very far in the future. we think these moves toward fiscal union is really what is needed to help investors reduce some of that with rhenium, and we are asked that risk premium, and we are starting -- some of that risk premium, and we are starting to see that. we think we will see some rebalancing touches because it is prudent, particularly with u.s. assets or u.s. fixed income assets not offering the same thed, but we do think that improvement on the euro area front should see some active rebalancing towards euro area assets as well. commentshave seen some from the ecb, one of the group of the frugal four speaking out against the fiscal recovery fund in the euro zone, that some of the data has been better-than-expected. is the danger with better data interrupt that it increases the voice of those frugal throw, and

the recovery fund be diluted? samuel: i would say that is a risk. in our baseline scenario, the recovery fund does pass. there could be tweaks around it. be strengthen the frugal true's -- the frugal four's position, but we think there will be enough to get this over the finish line. when it comes to the ecb, i agree, it does seem like some of the data has been quite construct. this should only think -- quite constructive. this should only encourage european institutions to keep their foot on the gas. they've really got an opportunity to build on better-than-expected data, and we think we could really get the economy going. anna: the euro just down zero point -- down 0.1%. thank you so much, sam zief of

jp morgan. coming up on the program, dr. , giving us perspective of the virus outbreak in texas, so crucial to our understanding. this is bloomberg. ♪

anna: this is -- leigh-ann: this is "bloomberg markets." softbank shares rose today to a new high for 2020. the stock is being propelled by

a series of buybacks that have seen the stock recoup the losses suffered during the coronavirus crisis. the recovery is something of a vindication for the ceo after he unveiled plans to sell ¥4.5 trillion of assets to reduce debt and bankroll record share buybacks. uber six years in japan, is finally hitting the road in tokyo. the ride-hailing company is partnering with three local cab operators to make 600 cars available. they will mostly run in tokyo's central business district. a isese beverage giant wahah weighing an initial public offering that could raise more than one lien dollars -- $1 billion. wahaha has1987, grown into a food and beverage giant. it's products are available in more than 30 countries, including canada, singapore, and the u.s.

that is your bloomberg business flash. anna: thank you very much for the update, leigh-ann gerrans with your business flash news. coronavirus cases in the u.s. are surging, jumping the most in almost eight weeks as americans gear up for the big july 4 holiday weekend. in the u.k., boris johnson is britons to act responsibly as pubs reopened, less the virus get out of control. joining us now is dr. peter hotez, baylor college of medicine professor and dean at the national school of topical medicine, coming to us today from houston, a really important place to understand at this point. good to speak to you. give us a picture of how dire things are on the ground in houston, from the ability of the medical professional to cope. dr. hotez: what we are seeing

here in houston, as well as across the metro areas of texas, antonio, austin, dallas, we are seeing a massive rise in the number of covid-19 cases, almost a vertical slope, with unfortunately some of the projections showing that they could potential he double or more than that at the end of july. it is being paralleled by a steep rise in hospitalizations, and now intensive care unit admissions. so this is a very concerning situation that we are very worried could look as bad as new york city did during the spring. is your perspective, that it could go the way of new york. what about the latest change in direction we have seen from the governor, the instructions now to wear masks? do you think things are changing? how quickly can these changes in behavior make a difference? dr. hotez: that is the big question.

we now have the governor having mandatory mass quarter with recommendations to stay at home, and in the cities and the counties such as houston, we toe red alert, which is recommend people stay-at-home. whether it will be enough for we have to take further measures, we don't have a lot of time because the numbers are rising. it is not only here in texas. similar things are happening in florida, arizona, maybe now georgia. we are seeing this very aggressive and worrisome resurgence of covid-19 across the southern part of the united states. unfortunately, this resurgence looks like it is going to be worse than the first wave. and it doesn't seem to only be infections that are on the rise. it also seems to be deaths. someard from the cbc that

12 states have deaths now increasing, including texas. what is this experience like in terms of the link between the number of infections and those that sadly lead to death? what are the statistics like that on that? nothotez: so far, we have seen a big increase in deaths. they generally lag the hind the cases because deaths often occur for patients and ventilators or in intensive care for multiple weeks. the other piece we are getting to understand better is the long-term chronic complications of covid-19. we are seeing a number of visuals with long-standing lung disease, cardiovascular disease, heart disease, even neurologic injury, including psychoses as well, so we are only now beginning to understand the complications.

we will have a lot of disability as well. the other piece we are seeing, we think the low income neighborhoods are being hit generally hard. so we are seeing the underlying rates of diabetes and hypertension and other comorbidities are high. this is the full picture starting to unfold, and it really is a tragic situation. we are just not getting that level of federal guidance that we need. i think the strategy has been, look, let the states make decision. the federal government will provide backup manufacturing and supply chain issues, but i don't think it is working. what do you think should be the recommendation around the fourth of july weekend? we know that president trump is going to be at mount rest -- at not rushmore, a gathering where mask -- at mount rushmore, a

gathering where masks won't be mandatory and they won't require social distancing. dr. hotez: we are seeing a very profound acceleration of covid-19. this is not a time to do any type of public gathering. if you can be at home, stay-at-home. certainly, if you have to go out, wear a mask. this is a very dangerous time in the united states. dr. anthony fauci, who has been leading a lot of art infectious disease efforts, has suggested that the numbers could go as high as 100,000 cases in the united states today. to put that in perspective, at the worst in march and april in new york, it was around 30,000 cases a day. , if you000 per day mark look at the populations of florida, texas, arizona, we are already there. the big issue is we don't see an obvious end in sight to this. this sterile -- there still

isn't the federal effort we need to quell this terrible epidemic. so we are just going to be taking it day by day and hope that some of these new measures will have an impact, but there is still a lot we don't. -- we don't know. anna: thanks so much, dr. peter hotez, baylor professor and dean of the school of topical medicine. let me just tell you a little bit about what is happening in terms of politics in the americas. president,exican headlines suggest he will be meeting with president trump on wednesday, leaving for the united states on tuesday. they are still trying to work out if prime minister justin trudeau will meet them in d.c., but that is a developing story. we will have coverage of those meeting next week. coming up, european markets on

the back foot today. still a lot of concern about the virus, as we just reflect on what that means for the economy. we will talk to simon french. this is bloomberg. ♪

anna: that music tells me it's time to remind you you can join bloomberg's annual fireworks spectacular. from the comfort of your own home this year, wherever you are

in the world, if you want to celebrate fourth of july you can do so starting at 9:00 p.m. new york time on bloomberg television, radio and dot-com. let's check in with leigh-ann gerrans. leigh-ann: hi, anna. the frempling french president macron has named jean castex as the country's new prime minister. the relatively low profile castex replaces edouard philippe who resigned earlier today. macron is reshuffling the government to focus on restarting the economy after months of lockdown. many government people are expected to be replaced. the european central bank president fighting tool is becoming the focus of disagreement amongst policymakers, governing council members face a potential risk over how much the emergency purchase program should stay weighted toward weaker countries such as italy. that's according to multiple

conversations with essential bank officials. president trump heads to mount rushmore today for an early independence day celebration. 7,500 ticketed guests are expected to gather. they won't be required to wear masks or socially distance. earlier this week south dakota's governor said if people have concerns about catching the coronavirus, they can stay home. and north korean leader kim jong un is urging owe fegses to keep up the fight against the coronavirus. kim warns that complacency could lead to "unimaginable and irreversible crisis." despite the warnings kim has reaffirmed north korea's claims to not have had a single case of covid-19. this is widely doubted by global health officials. global news 24 hours a day on .ir and on bloomberg quick take

i'm leigh-ann gerrans. this is bloomberg. anna? anna: thanks very much. the u.s. labor market reporting better than expected employment numbers on thursday ahead of the holiday weekend. stocks climbed on prospects of economic rebound tempered by reopenings. president trump: the united states economy added almost five million jobs in the month of june, shattering all expectations. >> spectacular number and it helps the overall situation enormously. >> on a standalone basis, this is a very strong employment report. >> 34% ever the jobs coming back is a reasonable expectation given what's happening on the ground with the progression of the virus. >> the unemployment numbers, which look impressive, are really stimulus driven. >> this data really underscores how rapid things change in the covid tainted economy. even though we did get a really

important upside surprise today, it's way too early to declare victory. anna: u.s. markets are closed today for the independence day holiday. simon french, panmure gordon's chief economist, joins us. very good to speak with you. let me ask you about this jobs report. i was amazed to see the range of expectations, the range was from 500,000 to nine million. certainly a very broad range, and there were things to be impressed by about the size and scale of this number. but many people saying with the closures we are seeing now or at least the stopping of the reopenings we are seeing in some u.s. states that we shouldn't count on this trend continuing. what was your assessment? simon: yes, i think that's the right caveat in terms of actually looking at when this data was collected in mid june,

probably the low point in terms of infections and the temporary layoffs that were re-employed, you would expect those to start to fade if reinfections are a decent indicator of further lockdowns. i think there is a second caution to have here, which probably goes for all countries, not just the u.s., the degree to which it can do localized shutdowns and how tenable that is with what is such a geographically mobile work force. anna: do you also have fears, simon, about when policy put in place by the federal government might be redrawn or reduced, some sort of cliff edge experience for the u.s. economy as a result of that? simon: well, i certainly hope not. my expectation is is that the unemployment insurance boosts that have been provided by congress will be expended beyond the end of july, particularly if

significant states are being asked to relock down, close down significant portions of their economy. i think that fiscal stimulus from the u.s. treasury will be whatever quantity is required based on what is the management of the public health crisis, but it goes to the heart of whether at 11% unemployment, the unemployment rate three times what we saw in q1 whether this has any chance of coming back into low single digits over the next 12 months, which would be the definition in my book of a v-shaped recovery. i think that looks unlikely even after the jobs reports. anna: simon, let's jump over to europe, a little closer to where we find ourselves, the u.k. story. we heard from brussels this week that there is an expectation of a landing zone, the dreadful

phrase in this situation. this is all around the transition arrangement coming to an end at the end of this year and what kind of trading relationship we in the u.k. have with those across the channel. what is your expectation for when this starts to become a big market issue again? with all of the covid-19 pandemic developments taking place here and everywhere, it seems like it's on the sidelines. simon: yes, and for a number of investors who have seen the pricing of particularly u.k. but also european assets heavily influenced by brexit discussions, it will be some relief and it is the smallest of relief amidst the covid pandemic that this has slightly moved off the list of headlines. it will come back. there was talk about the end of june being a crucial cliff edge because of that being the time which an extension of talks which are due to conclude at least according to the negotiating parties at the end

of july. an extension would have been requested by then. my own expectations, and this has been echoed recently by the chief negotiator, is this will come down to european council meeting in mid october. if you are looking at undervalued u.k. assets on the currency side and equity side, we can afford to be patient because i think both negotiators need to play to their galleries, may ic falling out compromise early on in the fourth quarter. anna: strategic arguments perhaps. lit me ask you about the gaps that remain between the two sides. it doesn't seem as if that list changes very much. it comes down to the role of the e.c.j., products standards and the like and it doesn't seem that much progress is made to remove those items from the list. where do you see the thorniest of issues? simon: well, arguably actually

it's the least economically relevant sectors. you take the fishing industry and its relationship to european negotiations, which may be the hardest to find common ground on. actually in terms of the role of the e.c.j., level playing field commitment, this wade through in terms of diplomatic solution which perhaps pleases no one but minimizes the level of displeasure. in terms of fishing, the u.k.'s insistence on being an independent fishing state, that's going to be very hard to achieve within parameters of the negotiating mandate. it will be difficult to see him return to that without actually significant concession on either european or the u.k. side. anna: simon, thanks for your time today, simon french of

panmure gordon leap-frogging with me across the atlantic, into backdrop for what is going on. from the campaign trail to the halls of congress, america's wealth gap is a frequent topic in political discourse. but less than a century ago, things looked very different from today. bloomberg's david westin has ore. david: after world war ii the united states embarked on a path toward income equality as the top 1% of earners lost a significant share of the nation's income for a generation. but in the early 1970's, the nation took an abrupt turn in how earnings are distributed. flash forward to today and america has the highest level of wealth inequality among all of the g-7 nations. income tax data show that the average salary for the bottom 99% of american families roughly doubled from 1945 to 1973 while

incomes for the top 1% grew by just over 1/3. but between 1973 and 2007, the bottom 99% saw income growth of only 15%, while income for the top 1% more than tripled. race plays a large role in economic inequality. the pugh research center found in 2016 the net worth of a typical white american family was 10 times that of a typical black family. the recent economic downturn will likely make things only worse. during the last recession, the median net worth of black families declined more than that of white families, while white and asian americans outearned black and hispanic americans at every rung on the economic ladder. trends in increasing income inequality aren't likely to stop anytime soon. the congressional budget office projects incomes for the wealthiest americans will continue to grow significantly faster than for the poor and

middle class through at least 2021, boosting the 1%'s cumulative growth to 281% over the past 40 years. anna: that was a look at the wealth inequality in the united states. on a programming note, the bloomberg special unequal america looks into economic inequality in america and how it may play into the november election. that is is tonight at 9:00 p.m. in new york on bloomberg tv. time to tell you what is going on in the program and check the market for you. we have stocks in europe, trading here in europe, coming up to 2:00 in europe. . are down by .6% some heavy losses in spain. u.s. equities not open today. the euro is a little weaker.

interesting comments, speaking on a bloomberg webinar talking about flexibility has served them well. that is in relation to the e.c.b. bond buying program. this is bloomberg. ♪

♪ anna: this is "bloomberg markets." i am leigh-ann gerrans. boeing is pulling the plug on its 747 jerusalem bo jet, ending production after half a century

for the plane. the decision hasn't been reported but sources tell us it can be worked out from the subtle wording changes in the company's financial statements. despite their popularity with travelers, the final version of the 747 never really caught on commercially. citigroup is unlikely to bring more than 40% of workers back to the office until a coronavirus vaccine is available. the bank has started to bring a small percentage of staff back, but it's 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 elon musk is again taunting the securities and exchange commission while commenting on twitter about tesla's surging share price. he started joking about short serlers and then referred to the regular tore as the short fellow in richmond commission, the phrase he first used in 2018 after the s.e.c. sued him for

securities fraud. that ended in a settlement agreement. that's your bloomberg business flash. anna? nna: thanks very much, leigh-ann. the bank warped of the flurd line between bhon tare and fiscal policy. he used to be at the e.c.b. and he has been talking to my colleagues here at bloomberg. let's listen in. >> they have to do a lot because the crisis is not over as we ave heard. central banks would have to ontinue facing uncertainty and helping households face uncertainty and the more they have to -- higher the risk that they would close the line. people have to be mindful of

that. anna: yes. do you actually see that readjusting at any point or will they be more likely to actually cross that line that you say they're getting closer to? >> it's interesting. it has readjusted. what we have seen is a strong action from governments with record numbers and also for the first time a plan to use government resources, coordinate theurces and common to face crisis. fiscal policy is waking up to the challenge and that's really good news, going in the right direction. >> benoit, i want to lean on your expertise for being former executive board member at the e.c.b. because i spoke to a guest earlier who said we won't e a steeper curve or balance

reduction this side of 2025. do you find that problematic? benoit: that's what markets are saying. if we listen to what markets have to say, that depends a lot on the way the european economy will step out of this crisis, which is very hard to tell. it is a likely scenario and really the stake here is about raising productivity abroad, differently from before the crisis. so capital can go back and ultimately the e.c.b. can retreat. but the key really is lifting productivity. >> the french government is looking at ways to extend crisis measures with a long-term furlough, turning loan guarantees into partial equity. earlier we were talking about the crisis fighting measures. what are the risks of government

prolonging emergency support in france but also elsewhere? benoit: it's a transition. it's a transition. in europe, the acute state is behind us and we don't see signs of the crisis coming back, the virus coming back to the extent that would require new lockdowns. so what government has to do is -- itue the transition to involves moving from liquidity issues to solvent issues. lots of firms in our economy have severe solvent issues and some instruments will have to be involved. >> the former e.c.b. executive board member speaking to my colleague at bloomberg. i should correct -- i said he

leads the b.i.s., he leads the innovation part, what i meant to say. elsewhere in europe, governments are extending crisis to avoid economic calamity. furlough moratoriums are being extended even as restrictions lift. currency traders are giving the government a vote of confidence in the recent approach. ere with the details is dani berger. >> a potential risk in the e.c.b.'s bond buying program and who to extend it to but that's just today. really the long-term trend here is starting to emerge and that is support for the euro. this has to do with a vote of confidence in ha the government is doing to help curb some of the issues, some of the pan depic coming across the nation -- pandemic coming across the nation. if you look at the euro, it gained against the dollar more than 2%. that's going to be its best two months since 2018.

a golden cross forming against the dollar. that's another vote of bullishness. it goes further than just this. we have seen option traders jump in and price the euro that it will gain from here. risk reversals against the yen are heading to a net bullish euro territory, which is very rare because typically the yen is going to be benefiting especially in the middle of a pandemic. this year is a big vote of confidence that the government will be able to protect the public sector. -- dani, the role of the there have been policy disagreements. why is there still optimism despite this? dani: i think it's really a story of relativity. if you look at what is happening in the u.s., it's a fragmented policy response. the number of coronavirus cases

continues to surge. but in europe, the cases are at bay. they're negotiating a new fund, so that really seems to be carrying things through here. not to mention that the yield curve policy control by the fed is increasing investment. it doesn't look like the e.c.b. will cut so that removes interest rate differentials that may hurt this european trade. anna? anna: dani, thanks very much. dani burger at bloomberg with a look at the euro today. lots of moving parts when it comes to the euro. plenty to talk about on the e.c.b. front. we had an interesting conversation a little earlier on in the program about that. that's it for this hour of this special edition of "bloomberg markets." european equity markets are down today. particular weakness on the london market and the italian markets today. coming up next guy johnson takes us through the close of the

european equity session. it is not the fourth of july. it is the third of july but u.s. markets are closed today in lieu of tomorrow, which is the fourth of july and if you are -- w?w?uhó

♪

john: 2:00 p.m. in london, 9:00 a.m. in new york where it is a holiday. i'm guy johnson, welcome to bloomberg markets. america is out, meaning the europe in markets are truly trading as they normally are. we are definitely trading off today, just to give you 90 of what the particular is, i don't think we will get a true reflection of wrist appetite until monday morning. london is underperforming. u.s. futures, trading today, are also lower. we had a strong session overnights, particularly out of china. pmi data strong and confirming we are seeing a recovery over in china. that has the three si -- the csi 302 high.

300 to a high. the political story front and center today, emmanuel macron shaking things up in france. the french president shuffling his cabinets, naming his new prime minister. is our next paris guest to get an update on what is happening. thank you for joining us. the first thing is, am i saying his name right, and who is this guy? [laughter] >> you are saying his name right. because the new prime minister was totally known in the general public, but in france before today, he was responsible for the ease of the locked on post covid. had a different mandate

in the southwest of france, currently mayor of a small town there. quite right wing. he was a more advisor of nicholas in 2010. [inaudible] the time supporting the former right wing prime minister who was a candidate. joe: -- jean castex is they president wearing the 2020 olympics in france and is apparently on top of hospital issues, something is -- president macron promised to increase salaries for hospital staff and the hospital in general. another thing will be the retirement reform, which is

the next big thing this winter. mr. mccrone's, party had a disastrous round of local elections. i'm assuming this is genesis of this reshuffle? caroline: that's right. , wholy, after jean castex is quite right wing, in the rest of the government, macro needs a green card. we are thinking the former head of club 21 was one of the names, even for the prime minister role. women who could join the next government. this next government is going to be detailed over the next few hours. daysll happen the next few before the next technical team which happens on wednesday. clearly, we need a green card and a social card, according president macron.

[inaudible] because of the pandemic also because of the retirement needing to be adjusted. and remember, the yellow vests protest a couple years ago are still on everyone's mind. macron needsnuel to think about the next presidential election, which is in 2022. by replacing his prime minister, he is trying to eliminate the as they wereal coming increasingly popular. guy: historically, that has not work. historically, you kick out a prime minister, particularly a popular one, he or she tends to become a rival further down the road. have we just seen the start of edward philippe's campaign to

become the president of france? this is: we think that not going to happen for two reasons. of mccrone's choices of right wing prime minister is a replacement of edward philippe to leave it harder space on the right wing side of emmanuel macron's electorate. it is clearly leaning to the right wing more than the left wing. also, edward philippe has been asked by emmanuel macron, even though he is going back to a askl mayor, mccrone still him to create this new confident -- to prepare the next election of 2022, because mccrone thinks the party that had a defeat last

weekend i cannot be the right vehicle for the next election. guy: nice update. think you much indeed. we will look the news on the announced it's regarding cabinet posts over the next few hours and probably weekend as well. caroline connan on the new french president. market have more on the from j.p. morgan asset management. we will kick it off with political risk. ♪

♪ guy: the stocks are trading lower. it's like volume.

we have the u.s. out and we are also watching developments in the united states, particularly when it comes to virus risk. you saw the comments yesterday, quite alarming in so many ways. is j.p.us to discuss morgan asset management mobile market strategist vincent juvyns . i want to talk about the virus, but let's start with the political risk. we have been talking to gary in paris about france. we also have an election coming up in the united states. are investors underestimating the political risk they face right now? so, butldn't say there's a lot of uncertainty in the u.s. in europe, there have been a lot of -- due to the more assertive stance of many particular leaders in europe more integration in europe. [inaudible]

we will see in the next two weeks whether he was right or wrong on sudden teen and 18 -- on 17 and 18 of july. decision -- huge gamed be a changer for europe. guy: do you think that will happen? angela merkel was speaking earlier on and describe the talks as rocky. vincent: it is not easy. there are a lot of people and things going on. macron is [inaudible] the fact germany has the presidency at the moment and german is supporting the idea,

is already in my mind a big inference to what we had angela merkel that had before. .ngela merkel seems keen she will really try to leave something behind. this was pretty much taboo until couple months ago, to be so supportive for something which showing [inaudible] two heavyweights behind his idea. i hope this could happen, but there is still a lot of uncertainty. [inaudible] condition in the final plan. then, we need to talk about

the ecb. we will do that in a moment. european assets and the euro have been out performing over the last couple months. do you see that as sustainable? i'm looking at the small -- this morning's pmi data, up from the flash but still a negative number. that is telling me things are better, but they are still getting worse. rates have changed on the downside and they may have slowed, but we are still moving to the downside. [inaudible] we can say the worst is behind specter,rom a health the situation has improved and we have been able to open the economy in most of the aces -- most of the cases.

the stability in europe is quite adapted to the fact that we have been able to put so many people on temporary unemployment. it will be easy getting back to work once the economy restarts. it's a better system than in the u.s.. we may reconvert faster than other regions, but the main portion is the one we just discussed. there's enthusiasm about that public see maker's are ahead of -- policymakers are ahead of the curve. fiscal this massive incoming from the organization. the 17th andg for 18th of july. that would potentially be a game changer for europe and its

markets. massive may be a slight overestimate of what we see relative to gd of the eurozone, but nevertheless, i take what you are saying about the step change into politics is being quite positive. invest, you get more positive on european assets at that? here is the problem i have with that. we don't have much technology here in europe. we don't have the kinds of stocks that america has that have driven the rally. and for that matter, driven the chinese rally as well. i appreciate there is a lot of health care here, and that is a positive, but nevertheless, does europe have the right competition for global investors to want to engage with europe more despite what is happening with the politics and mac wrote to her -- and macro picture?

vincent: you're right to say europe has been driven by [inaudible] health care can help us. but europe is a difficult place by nature. in theinue to be hopeful performance of europe, you need -- and wethe cycle will see a v-shaped recovery or strong recovery. we may not see a v-shaped recovery everywhere, but in china, asia, this seems to be the case area did europe will benefit a lot from that. -- case. europe will benefit a lot from that. one of the main benefits from this trend. just in terms of how you

would be positioning right now. orchestrate what the right makes right now is for investors, given the uncertainty into the second half. believe risks are bit more balanced. there is are unknowns and this wethe first of its, whether have a second wave or not or whether we need to reimpose lockdown. that is a worry. [inaudible]time, ins is the risk expectations, so markets are going to reflect these uncertainties in my opinion. we are clicking at a more clearyd approach -- looking at a more balanced approach. for many months, these are

markets we keep, but we are definitely, as we discussed, are warming up for europe. a gross diversified equity exposure at the moment, warranted we believe. as we have the worst from the pandemic and economic downturn behind us. also, on the fixed income side, having a more cyclical tilt, investing with central banks by favoring great credit, for instance. do you think the fed will do more? do you think central banks will have to do more? what do you see on the cards there? we have the ecb in a couple weeks time have already done a lot. we had the u.s. payrolls, looking positive. the fact that we are getting some evidence of recovery will dissuade lessee

makers on the fiscal and monetary aunt -- policymakers on the fiscal and monetary aunt -- front? >> its early to say whether more is needed. policymakers and central bankers have been clear that they will do whatever it takes. year, the weather -- as well. and it is open-ended by nature. you will see it stop at some point, but as long as it is needed, policymakers have .earned a lesson ending it too soon would be a risk. we continue to count on central banks for the foreseeable as thatand as long

happens, the inflation, which has slowed the easing process, is not there at the moment. the crisis at the moment we are facing is deflationary, so many central banks continue to do what they are doing at the moment. guy: thank you very much indeed. nice to see you. vincent juvyns from jp morgan management. this is bloomberg. ♪

guy: welcome back. we have so much about the virus. let's do that right now. we need to talk about the latest vaccine developments. gilead sciences remdesivir has been confirmed to treat covid-19. is our bloomberg

intelligent senior analyst. dr. fauci says the virus is mutating. how worried should i be? thing whener a nice , in someutates because cases, it becomes worse. in this case, it appears the mutates -- it is not the first time we have heard about this. the people who already published on april, some of these mutations were already being seen earlier. like the different virus, slightly different, is more infective, so it can infect people easier. folks will have worse disease is not clear. whether that means whatever vaccine is being developed won't be able to counteract it either is not clear either. guy: that seems like quite an

important last thing you said there. how this works. when a virus starts to mutate, how much does it need to mutate for current vaccines and therapies not to work anymore? vincent: one mutation can do the trick, but remember, this is not a virus trying to fight drugs. this is a virus that just managed by accident to have a mutation that makes it more infective, which means that virus, that strain of virus becomes more prevalent. develop is people will this is very low but has to be looked at. the way the virus has been

causing fatalities in so many cases has been by causing an inflammation response in the body. there was a key drug that regeneron was trying to develop. this is an arthritis drug i understand. it failed in phase three. how significant is this and how worrying is this in dealing with our battle with the virus? vincent: it's not petite ash >> it's not particularly worrying. there are an arsenal of other drugs tested. the thinking was that that drug, showed in potentially some trial effectiveness could tried it in athey proper trial and it did not work out. this is a drug that has been used for on a similar issue that

arises in cancer therapy. i'm not completely closing the door on this particular approach. honestly, there are so many other ways people are trying. we already have read does severe -- remdesivir and i'm sure we have two or three other ones. guy: the british population is about to go to the pub this weekend. what should we expect from that, in terms of the case count? place thats the one i would avoid. i don't want to use that phrase but like the plague. sharing glasses, these are social places where people will be talking to each other and near each other. you aren't going to wear a mask with each sip of beer you take. like perfect

conditions for propagating a virus. i would think hard about going to the pub. not the words i wanted to hear, but sam, i will take them on board. thank you indeed for joining us. sam fazeli joining us on the latest surrounding the virus. coming up, a senior investment manager will be joining us next. his take on what is happening. this is bloomberg. ♪

guy: i'm guy johnson. this is "bloomberg markets." the u.s. markets are closed so volumes are light. we need to check in and find out what is happening.

one person to ask today. >> while global equities are headed their best week in a month, but to be honest, you wouldn't know it from looking at the price action in today's markets, limping toward the end of the week. european stocks are down 6/10 of a percent -- .6%. a lot of weakness emerged after there was weakness merging in the ecb. u.s. futures, cash market is closed. all humans are light. take this with a grain of salt. even though it is a holiday, the risk between the nasdaq and s&p is emerging. tack continues to outperform. the nasdaq 100 hit a record yesterday. through this pandemic, markets say tech will be just fine. i want to look at currency markets because they have refused to budge all weekend. today is no exception.

flat from the dollar and from the pound. the dollar is saying i need something more concrete to sink my teeth into. the jobs report yesterday was not enough to get people excited either way. the pounds, even though everyone tomorrow is headed to a pub or restaurant, that might not be enough to lift it with consumer coming back. andmight need more time brexit wobbles are still ongoing. crude is down today but heading for a weekly gain. i want to look at the guild market because it is not to losing much today but the trend -- but the long-term trend is interesting. look how close it is to japan's 30 year yield. three basis points away -- two rather. if it does, that is the first time japan is yielding than the u.k. -- yielding more than the u.k.. the borrowing bench the government has had to go on, need to hear the boe not pursuing negative rates, to make sure the flip does not happen.

i want to take you into the charts. this is one of the stories emerging over the last couple months, a vote for the euro. options traders saying we think the euro will get stronger from here. this is the risk reversal versus the yen. it is almost zero, a neutral position. then, into a bullish territory against the yen which is rare, because the yen is a haven. he would think during a pandemic, it would be well bid. in a way, this has the european governments have done a better job handling the pandemic. you can see that in the case count. a vote of confidence the european government is able to contain his pandemic and economic fallout. guy? guy: perfect set up. dani, thank you indeed. a senior investment management, james athey joining us.

james, i read your note first thing and i was quite impressed about the prospect of the eurozone. you do not have great expectations for what can be achieved. james: good afternoon, guy. not really. essentially, we are still dealing with massive structural problem's, which are being swept under the carpet, which are being masked with cyclical policies, which are intended to distort market pricing to make it seem as though things are better under the hood than they really are. there is obviously a debt issue globally, too much debt. there are regions within the eurozone where that is dramatically the case. that is the result of the structural problems within the eurozone. you have a huge competitiveness cap between north and south-- gap between north and south. of thep means diversions

economies rather than convergence when you are locked into a monetary union. your means for dealing with the diversions and economic activity are limited in a monetary union because that would normally be a role played by the currency. that problem has not been doubt with -- dealt with, even by the recovery fund. if it were to be passed in full, which i don't think it's well, as we have seen from the announcements from the commission, it is the only emergency measure and will be small in size. it will still not be something that will have an automatic school stabilizer during the economic cycle. therefore, you have a competitiveness that cannot be equalized, pumped through a massive devaluation which is far too socially and politically painful for anyone to choose. ienever these issues persist,

tend to be bullish on the region. guy: so you buy bonds and then the dollar? funny the dollar is a one. -- bonds are a funny one. they have not been expecting as we expect. tohink it's more attractive own -- rather than bonds at the moment. you don't have to deal with supply issues. in germany, it has stimulated in a way we have not seen for quite some time. that means more supply than we have been accustomed to. i don't think that means a rise in bond yields, but it makes tricky -- makes it tricky. it is still worth owning because the ecb is trapped as far as the eye can see. and the eye can see instance without feeling too concerned about the ecb hike.

with the dollar, we are starting to see the week as tire a little bit, and i see many bumps in the road ahead for the global economy and global financial markets area that -- markets. that flight to quality normally happens against the dollar, but the world economy is going to grow. it's almost impossible for the global economy to do well without the u.s. doing well. when the u.s. does well, it tends to drive the dollar higher. created a lot of excess liquidity in the system, which is being, ultimately i would've thought, ended up in bcp.s like tell me how, as an investor, you manage the excess quiddity. i struggle to believe eurozone banks will find it sufficient demand to lend this money out.

james: it is difficult, isn't it? we keep talking about liquidity in a high-level way. need toquite often you be more surgical about what you are describing when you talk about liquidity. you need to make forecast assumptions about what that money is there far and where it is likely to flow to, to truly form a solid conclusion about what the right investments are, because we know, from recent experience after the crisis, that liquidity in the financial system does not necessarily lead to liquidity in the real economy area that transmission has been broken, and there are many reasons for that. i don't think those reasons have gone away and one is demand credit. if you have a demand for credit issue, you can push as hard as you like, putting cheap money into the system. it doesn't necessarily lead to lending activity. if that is the case, financial

assets will be the beneficiary. if you start to see the money flowing into the real economy, it might allow you to be bullish on growth, but at the expense of assets that may have been propped up in financial markets. in the case of europe, the banking system is really part of a problem, not part of the solution. the ways in which the ecb are structuring recent liquidity provision programs, to me, it incentivizes a lot of banks to engage in the carry trade at the end of the ecb market, and none of that is likely to go into the real economy. certainly two-year point, that makes ptps -- btps on the short and look attractive, but it is negative over the medium-term for the italian economy. james, we will come back. we need to talk more about politics. i want to talk about your

thoughts on the payroll number friday, what happens as we work our way toward november and how we try to ice that political risk in. we will do that in a moment. james athey from aberdeen standard investment will stick around with us. coming up, the u.s. is reporting better than expected jobs numbers. we need more detail on what is happening. -- coronavirus cases are surging. the yen and yang the market has to deal with. yang the market has to deal with. this is bloomberg. ♪ s is bloomberg. ♪

in a wanted to be done smart way and targeted way. i think the shape of any kind of package is very much up in the air. he has emphasized a number of

programs. negotiations one formally begin until after the recess, july 4 recess.

who have taken on debt served -- choose to pay down the debt and manage the risks, as opposed to people behaving like investing in hiring. the combination of those factors means it is unlikely the 4 million gains on payrolls is going to be a tall -- for what is happening six, 10, 18 months out. guy: clearly there is a need, and kudlow was addressing that in the conversation he had yesterday. for another round of stimulus. there does seem to be the narrative developing in washington that there also needs to be built in to the next program, incentives to return to work. are we too early in the process? are we too early to be thinking about trying to think about forcing people back into work at this stage? the idea is to build the bridge to the point to which the economy can function again. maybe not at potential but close to it. and increasingly, it looks like that is some way off. james: yeah.

there is a balancing act here. you don't want disincentives to work, but you can't assume that by removing disincentives to work, people will be able to get back to work. what we have seen as a massive demand shock. it is not localized to any region in the u.s. or the u.s. in general. it is globally. that is something we have little experience in dealing with. to me, it is right to be thinking about the incentives that are created by any set of politics. i think we talk about moral hazard a lot. unfortunately, concerning ourselves with moral hazard has completely gone out the window when we are generating these policy responses to crises. unfortunately, what that means is we never get to deal with the underlying problem. apologies for harping on a little bit about a particular topic, but this all boils down

to the overreliance on debt to generate growth during the normal, shall we say, part of the economic cycle. that creates a problem, an overhang if you like, hanging over the economy which drags on productive activity. when the solution, as we have seen recently, is to add more debts, this becomes a meaningful problem for the economy to have to wade through. and it is difficult for governments to deal with that by looking at policies around unemployment benefits or incentives for workers to get thisto work underneath all. i'm not in a position to incentivize two or 10 strong enough to carry the burden -- to or strong enough to carry the burden in the aggregate economy. guy: there's a lot to be said. thinking about using much more

equity, in the corporate space rather than incentives. let's wrap the conversation up and talk a little bit about whether or not it is too early to think about a positioning for a biden presidency. james: that's a good question. it surprised me how little discussion there has been. are market participants looking to see what the presidency will mean. i think we are seeing that under station emerge now because influence on prices have him down a little bit. we don't know a lot about what policy prescriptions are likely. we also don't know who the vp candidate is. i think that will be impact all in terms of setting the agenda -- impactful in terms of setting the agenda for biden. we don't know if the democrats are able to win the senate. if you have a split congress, that does reduce the ability of any president to carry on and pass policies that they campaigned on. there are huge unknowns, but the

travel has been toward a democratic sweep. it looks unlikely with the dems winning the senate six to 12 months ago. it's looking increasingly likely now and the polls tell you the presidential race is strongly in joe biden's favor at the moment. i think markets will have to look into that deeper. my feeling at the moment is that it is not a particular market-friendly set up. biden has already talked about going back on some of president trump's corporate tax cuts, and we know that we'll hit a bottom line in an automatic fashion. it is likely that will have to be balanced with other policies, which potentially are distribution in nature. that is likely something that impacts confidence, because it is intended to be the wealthier portion of the population driving the activity and stock markets. that is all to come.

i think we will talk about that more. i don't see that being risk positive. guy: ok. there is some talk even of elizabeth warren being treasury secretary. that would certainly make me worry on wall street. james, really appreciate your time. enjoy the weekend. james athey of aberdeen investments joining us. circa 10%e down hard at one point since weighing fundraising options. atentially, that is mechanical thing to see. hong kong filing its first charges under the new law. we bring you the implications of what this ultimately means. the geopolitical implications. this is bloomberg. ♪ . ♪

let's talk about hong kong.

welcome back. tensions continue to flare in hong kong. this, as we see the new national security law that imposed on the terror ash that was imposed on the territory. joining us now is robert matheson to give us the take on what we need to talk about. let me just say, what we have seen is the first arrests coming through. the big problem here is that we don't know what this law actually implies. it is deliberately vague as far as i can tell. as a result, it is easy to fall foul of it. breath is wide in terms of what the hong kong and chinese economy can do with it. this seems to be the problem. i imagine lawyers will test it over the next few days after arrests we have seen. let's get your take on this.

what do we know about the effect it is actually having? >> what we can say already, it is extremely hard to interpret how it can be used and in what cases. haveat -- first charges been laid because a person was declaring a slogan that was announced illegal. the rallying cry used for months by protesters there is liberate hong kong, revolution of our time area he is also accused ash time. he is also accused of driving -- he is also accused of driving through a crowd. we have democracy groups that someither dissolving, activists attempting to leave the city in recent days it's a people scrubbing their mobile phone chat histories and deleting their social media accounts. there are concerns about self-censorship potentially by economists and business animal

is -- is this analysts basting hong kong. it is deliberately vague and hard to know how it will be applied. police do not have to detail the public under what way they have decided he violated the new law. the government continues to say the law will only be applied to a small minority of criminals who seek to undermine the government but there is clearly a lot of leeway to use as they see fit. guy: thanks for the update. greatly appreciated. the amplifications for people not only in hong kong but the business community i think is not fully understood yet. in the next hour, we focus on what is happening in the u.k.. an fx strategist will be joining us. remember, don't forget to tune into this weekend for

bloomberg's annual broadcast of fireworks fantastic dealer -- fireworks spectacular. that is going to be on bloomberg radio and bloomberg.com. this is bloomberg. ♪ you doing okay?

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a.m. in new york where it is ahead -- where it is a holiday. i am guy johnson on this is bloomberg markets. action sure the price today is particularly instructive. outave the united states which is lowering the volume in europe. negativeess, we are but up for the week. 6/10 ofx 600 is down by 1%. sunday, you will get a better clue an overnight you saw best -- a better positive session. csi 300 is at a five-year high. euro-dollar is going nowhere in a hurry. the dax this week over the last five days is up by nearly 4% and we are giving back a little bit of that but it has been a very

positive week. will it be a positive week in the u.k.? the u.k. is gearing up for super saturday with businesses and government hoping for a big boost in the economic recovery. we are opening pubs and restaurants in the economy is being let loose as are the british population to go to the pub. that could be a bit of a concern for the scientists. jordan rochester will be very well behaved this weekend. is this a significant moment in terms of the u.k. economy? i look at the data, the latest pmi and everything else in it tells me it will be a very tough road back. we may see a short-term fill up in services this weekend, it is unlikely to be lasting? yes, pmi's lagging information to us really going on.

alternative indicators how households spend their money and that's the stuff markets are now moving on. opened,essential shops we had a pickup in footfall but it wasn't a rocket ship. it wasn't a big recovery back to where we were before the virus. what will happen is you will have the pubs pretty full. they can't have as many people as usual. you will see a pickup in morbidity in the u.s. for the next two weeks. let's look at the u.s. as a good template. you had a few states that had re-openings earlier than the others and covid went back up and they had to shut them down again. even before the shutdowns were ordered, we sought the numbers of those peoples in bars and restaurants starting to decline anyway. is there is any sort of pickup

in virus cases, we will see the that feedthrough. then we could start to see the optimism waiver. guy: the chief economist at the and the increase the bank delivered last time around, and he is a different thinker and he's focusing much more on the real-time data we are seeing out of the economy. there are those that haven't got their arms around what andy is seeing and why he is so positive. the v-shapedch in recovery camp. are you with him? really, you are seeing a pickup and spending data. what he is trying to get across and maybe the press has put to another level is that we are in

recovery back to where we were and i disagree with that. the second point i disagree with is he voted against quantitative ed -- easing at the last meeting. i disagree with that because we still need that and we need progrowth policies and we need that. a spike inave seen u.k. yields and the government .ut have -- outpacing th qe i agree that there are signs of pickup because things were just so bad in march and april but i don't agree that we should stop doing stimulus and we should not go back to where we were. guy: the chancellor will make a thech which is essentially details the prime minister did not provide in his speech last week. do you expect from the chancellor? what are the things he needs to

avoid and what does he need to deliver for the british economy to carry on with this gradual recovery? i spoke to my colleagues about this because there is a debate if the chancellor moves now with tax cuts that have been thrown out. vac is a potential task that they could do and that was the story about two weeks ago. when i saw that headline, i thought that's not what the u.k. needs. we need job retention and capital spending and infrastructure spending and that's what boris tried to deliver in his speech a few days ago and that speech did not have much new in it, 5 billion pounds is a drop in the ocean. what we have been expecting is some signs of pickup of the chancellor has pushed again that

-- against that. cuthould not expect a vac but there is more focus on jobs. i'm not sure what else they can have on top of their retention scheme. it's coming to an end toward october. i doubt he will extended to because boris johnson said it will come to an end. the really confusing what chancellor will do. we have to sit and wait but if we don't get the vac cut, that's a negative for growth but if he comes up with some sort of reform, reforms are more powerful than spending. if they were to reform stamp duty and boris has talked about planning applications, anymore reforms about cutting red tape for businesses can be taken as positive by the market. important despite him pushing back on spending. if i saw lots of market reforms, i would be interested. poundhere are you on the

right now, buyer sell? -- buy or sell? >> sell. i think the euro has a more positive story. numbers of the people going back to the shops picking up on the number of cases of the virus staying low. like in those hot states in the u.s. where you had the virus pickup which is a double when he of negatives. europe is doing pretty well but in the u.k., we are more the european story when it comes to the virus, the numbers are going down a we are reopening so i could argue from the same perspective but there is more. brexit is in the background and there is no actual progress. we have talks each week this month and this week ended early with no progress made. in the u.k., we have higher inflation expectations and lower

yields. your risk-free return on assets is pretty low and falling. that should weigh on u.k. assets and you look at what's going on in the uncertainty in the government. we have a few it factors that make the euro look clearer and the u.k. is much more muddied and uncertain. i will switch and go long sterling if i see big reforms and do more spending or we see some sort of compromise and brexit talks. i don't think we will see that this month. that should happen more in september and october when things heat up. i hear a lot about boris johnson speaking on saying he is optimistic, more so than angela saying thathe was she is preparing for a no deal.

to work?is going will it be a last minute deal it gets done for you think the europeans are saying we mean what we say, we will not do a deal of any kind? the europeans are not going to shift their position materially. what they can do is try to repackage the deal in a politically favorable way for the u.k.. when boris agreed to the deal basically it was theresa may's deal with some changes have northern ireland is treated and he saw that as a success. it was a step back for the u.k. which gave away one of its redlines, that northern ireland could not have changes. boris might have a success in surrender -- and surrenders when you way you get through to the eu and that's possible. he might try to sell that later this year or he will try to sell an australian deal.

australia does not have a free-trade agreement with the eu so that's just a code word for no deal. that's what he also said this morning that australian deal would be interesting and good for the u.k.. learn anything from him this morning that we didn't already know. every single week of talks in july, if we hear the eu side they have some sort of compromise in there that shows some ground movement, then selling will really move. if we keep hearing from the u.k. that they are optimistic for a deal but there is no actual credible reality of change, we will continue this stalemate. we will battle on in sterling will be held hostage to having the premium versus other assets because of brexit and it will be held hostage to the global risk factor in what's going on in the u.s. in virus cases. not stick around, we are done.

it's not time for the pub just yet. coming up, more and what is happening in europe and focus on what's going on in the united states with big issues surrounding the dollar going forward. all that is next. this is bloomberg. ♪

>> the stake here is about raising positivity in the euro zone may be than before the crisis so that the return can go the ecb canimately retrace. the key is about lifting the euro. the former ecb executive

board member and now head of innovation ay bank of international settlement. about the ecb. you told me you are positive euro versus the pound. are you positive the euro versus anything else? also positive euro versus the yen. you have a growth story in europe and inflow story going into the euro zone from foreign investors. i think that is part of the bigger story. we've got some solidarity from the euro area block which we didn't have in 2011. that will be one of the key drivers. we are no longer talk about euros on breakup risk. we know germany and the rest of the big blocks in the euro zone will step up to make sure they

do just enough to keep the show on the road. in terms of debt risk, the ecb pandemic purchase program is mopping up most of the issuance. we don't have any debt crisis levels of spread but there are still problems if you look at high yield spreads. there is still some there that could be sorted out but overall, when it comes to the euro, it is outperform her versus the pound, versus the yen, versus the dollar because it's cheaper and those levels against the dollar. eurozone assets don't have that breakup risk anymore and they have a repricing of growth in the number of covid-19 cases remains fairly low and you've got fiscal and monetary support in the background. pandemicou think that emergency purchase program is sustainable? there is a growing debate behind but they say it's

possible to break ends the open. there is a concern that there is an unrestricted approach to bpp notassets such as permissible under the rules that there needs to be some sort of talk of the capital key in terms of the approach and ultimately you can seebcp's start to widen up in the market get scared by that. >> i saw the headlines this morning. there is not much of a positive to be gained by talking about your key program. it's probably pandering to the domestic audience. they need the pet program.

you had big deviations in one month and that's just how it goes. it needs to be kept up in terms of the program itself. if it came to an early end, that would cause trouble for the euro area. this debate is more hypothetical and pandering to the domestic rather than meaningful change in the ecb. debate is good so it's good to have the did eight. we just saw the german court case get squashed by the fact that the german parliament has voted for it. it's a fiscal motivation not to make a 2011 euro crisis. we have had this covid-19 crisis but usually the crisis that comes after as a result of this that hits the growth. the eurozone has widen -- wise

and up this time. they are going about it the wrong way right now. has come a long way very quickly. why doesn't it stabilize and go back the other way? there are a bunch of reasons why it couldn't happen. is that enough to keep the dollar down or do you think we are done with the recent moves? i have this one chart that i show my clients and it sums up the big dollar. it's just all about growth. if you have the u.s. growth story outperforming the rest of the world, the dollar strengthens and u.s. assets are more attractive. the other way around this time so we have had years of u.s. outperformance with donald trump tax cuts and tax reforms and exposure is pretty high.

we have a growth differential story taking place. had a jobas not scheme the rest debt the way the rest of europe has so when we go back to pre-covid times, we won't have a big shift to the supply side of the economy and hopefully most of the dobbs -- jobs come back. there will be a sharper recovery that have job retention schemes as you have the demand still there. will be a slower process. in the summer season, we can talk more about it especially when it comes to august. we will talk about joe biden and what he means for the u.s. economy and how he moves left of center when it comes to his economic policies.

-- got u.s. alice size assets and the fed has slowed down its qe program. we have reopenings taking place in europe and we got what's going on u.s. states with covid-19 cases and you've got moreelection with regulations were businesses in a biden wind -- win. that's why we are seeing the growth chart. the rest of the world is getting a little bit ahead of the u.s., given the dragster what's going on in the u.s. and the positives elsewhere. guy: enjoy the weekend, thank you for your time. jordannomura. is bloomberg. ♪ .

guy: time for etf friday so let's get an up date. talk me through this and what it will look like in the second half from a flow point of view. >> given how crazy this year has in thed the bad optics etf's early this year, the first half been really strong or etf's. 200 bill -- $200 billion net some of-- in line with the strongest first half's. the difference is the change in leadership meaning normally it's equities leaving -- leading the flows this year. a lot of that is induced by the fed on the other thing sticking category.ld is a gold is now over $1700 per ounce and there's been a strong amount of flow into some of the gold

funds. what i would be looking for into later in the year is probably a reversal of this trend given how weak the equity flows have been and potentially the fed stopping purchases in september, some of the trend should rigid -- should reverse and you could see equities catch up a little bit. guy: are you seeing any positioning ahead of the possibility that the fed might switch to buying equity etf's? >> for good question, if you look at when the fatten -- when the fed made the announcement on february 23, it's been a 4-1 ratio, almost all going to fixed income. how weak the equity flows have been, it's kind of shocking because the market is up 40%

since the fed announcement. you would think there would be front running but that's not happening on the equity side of anything. the flows continue to keep going on the fixed income side. of the winners and losers in the first half, are there any that really stand out? you mentioned a few asset classes but can you get more granular? plungedareas that has above its weight is the maddox. given the environment we are in working from home, everyone is not used to a remote lifestyle, the maddox has gained because these are based on cybersecurity and video gaming, working out at home. those etf's have gone very well for most performance standpoint. given the popularity of some of these platforms like robin hood and these trading platforms, they tend to attract more of a

retail audience so you are seeing more of a younger investor base moving toward these interesting the maddox etf's. thank you very much indeed. updating us as he does most fridays on what's happening in the etf market. .olls-royce is still down the jet engine maker is potentially looking to raise money we will see the impact in terms of the way it goes through with the process by the credit markets were the equity market. coming up, we will update you on what's happening in these markets. a quiet day with the u.s. out but nevertheless, we are paying attention to this as we pay attention to europe. ♪

guy: i'm guy johnson and this is bloomberg markets. u.s. is out today and volumes are light. let's figure out what's happening in these markets.

>> even though we have light volume, some excitement that we can talk about in markets. to excitement seems to be the downside. the u.s. futures market is up in trading even though s&p futures are down nearly half a percentage. the interesting thing is that tech is still raining supreme when there is barely volume. the nasdaq futures are outperforming. theerday at the close, nasdaq futures closed at a record high versus the s&p 500 so tech is still raining supreme in the dollar is stuck in a range today between slight gains and slight losses despite the job numbers yesterday with markets perhaps looking for more clarity to sink their teeth into. let's look at the european market because they are also falling like u.s. futures. of euro stocks 600 fell8/10

1%. the ecd -- the ecb is dealing buying programs for its weaker countries like italy. story, thepolitical prime minister is leaving as the 10 of 1%.wn seven/ some of the technology game -- names are doing better today. the u.k. on the ftse 100 are down. tomorrow is super saturday and pubs and restaurants are back open but if there is any hope of consumers going back, it's not being priced into that index right now. hisher sector to look at travel and leisure which is the best performer in europe stop in might have something to do with the u.k. moments ago announcing their full list of travel two

countries. they've include places like australia and japan so that will be of wound to airlines. just started their lawsuit against the u.k. government moments before they made this announcement. they are withdrawing that we are seeing some companies like easyjet go higher today. the might explain some of weakness in today's market. the fed balance sheet is in focus. after the close, the fed published its balance sheet and it was down for a third consecutive week. before the three weeks, we saw the balance sheet rise for every single week since march to deal with a pandemic. why is the fed taking their foot off the gas? the fed is says sending the message that the markets are functioning fine,

and equities are near a record high. it's something to keep in mind as we see equity markets really slump at the end of the week. still positive on the week which is worth bearing in mind. thank, indeed. we are starting to get information out of florida stop that number is a fairly stable number. that's the seven day average of 5.8%. we will get more information over the next hour and a half or so when we will keep you updated. one of the corporate stories is what is going on with rolls-royce. we are reporting its exploring options to raise funds amid the downturn caused by the pandemic. they are said to be studying the

possibility including a share sale and directing -- redirecting assets. charlotte ryan is here to give us the details. what do we know about what rolls-royce is planning? afternoon, what we know so far is that the company is in the early stages of examining possibilities to shore up the balance sheet to get through this pandemic. rolls-royce is particularly exposed to what's been going on in the travel market as the result of covid because it makes engines for longer-range planes which are expected to be the last to return to the skies. are looking atey different options including selling assets. unit is a spanish subsidiary

and that's a potential that they look to dissolve. how important is this that this is expedited quickly? how big a crisis are they facing? we will have a much better picture on rolls-royce's cash position next week when they give an update on trading. sinceill be the first april. if you have access to a reasonable amount of liquidity, around 7.4 billion pounds. they were one of the companies that did this. this is more of a long-term strategic move. we expect the recovery to take several years.

why wouldn't they do what others have done? some have tapped of the credit market. is that not an option for rolls-royce? is a littlet market more difficult for rolls-royce than it would be under normal circumstances. the company has already been to the outlook for the aerospace sector. i think we have seen similar moves. fortick -- it's difficult these companies given what's going on in the sector. thank you very much indeed.

you can see why the long-term share prices down by nearly 70% this year and tracking even lower today. they make jet engines for the wide-body airplanes. boeing quietly announced the end of the 747 program. coming up, we will hear from bridgewater associates coming up next. this is bloomberg. ♪

guy: i'm guy johnson in london,

this is bloomberg markets. we are confirming the story we just brought you about rolls-royce. it is in the early stages of reviewing its options. currentany says its financial and liquidity positions remain strong but it is confirming that it is looking at its options. the market reacting based on what is being reported. if you look at the chart, you may extrapolate that some people are looking at this and saying it may be we see an equity issue. that is what easyjet did and we will see whether rolls-royce does the same thing. we will come back to this story later. let's get you caught up in everything else. the french president emmanuel a coordinatored

for the coronavirus strategy. replaces his prime minister who resigned earlier this year. he's focused on restarting the country's economy after months of locked down. we didn't see a particular good local election for mr. macron's party recently. the british prime minister, boris johnson, says the u.s. government has not approaches administration to request an interview with prince andrew over his alleged ties to jeffrey epstein. during an interview on radio earlier today, he declined to comment on whether great britain would comply if a demand was made. sympathies are very much with the victims of jeffrey epstein. to you wouldn't expect me comment on matters affecting royal family. prosecutors in the united

states say prince andrew hasn't refused to cooperate with investigations probing epstein's sex crimes. lawyers for the prince say that .s not true epstein's long time friend maxwell has been arrested yesterday. cinemas and hotels hairdressers will finally be able to reopen tomorrow 3.5 months after the start of the coronavirus lockdown. prime minister boris johnson is urging people to act responsibly. he is warning the u.k. is not out of the woods when it comes to the virus. finally, president trump is heading to mount rushmore today for an early independence day celebration. guests are expected and they will not be required to wear masks. the governorweek,

of south dakota said if they have concerns about catching the virus, they can simply stay at home. that was your first word news update. are going to be crucial in supporting the global economy during this pandemic. raydalio told us that another outcome is that capital markets are no longer free. today, the economy and the markets are driven by central coordination with the central governments. what i mean by that is the purchases right now of financial assets by the federal reserve were the purchases by the federal reserve of government securities are the drivers of that market. production of the money, if you look at money and you look at

who is in the market. the federal reserve, for example, will set in interest rate for different types of creditors based on its economic objective. in the old days like when we had the 2008 financial crisis, we needed to protect banks because they were systemically important and money market funds and commercial paper. now it's much broader than that. the whole economy is systemically important. if they didn't go out and make including companies fallen angels, those that were just above investment grade and fell into investment grade, we would lose large parts of our economy. so we are in a situation now where they are the market makers. take the market outcome us 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 that-1%. that means you don't have interest payments. you have interest credits. take thatl banks will debt on. and they have a political agenda, not an economic agenda in which they will determine whether they will be paid back or when they want to be paid back based on how the economy is doing and what will happen. andhat case like in europe a similar situation in the united states and japan in varying degrees, they will make loans that will have interest credits almost or let's say, zero and you may not have to pay principal back. it depends on what the conditions are at the time. those are markets which are

, notn by central banks only their actions, but their desire to be an owner of those assets and their priorities of that ownership when they buy and sell are not the same as the classic free market allocations. as a result, the capital markets are not free markets allocating resources in the traditional ways. >> one of the questions investors are wrestling with is how far central banks are willing to go in their effort to reflate financial assets and they hope transmit something through to the real economy that would result in growth and jobs. erik: how far are central banks willing to go with this power they have discovered they have? banks are willing to go and need to go as far as it

takes in order to keep the system afloat. because we are in this late stage where they have a lot of debt, you are going to see central banks balance sheets explode. they have to because the choice is a sinking ship. the founder and co-cio a bridgewater associates speaking yesterday. still ahead, the french president rolling the dice on a cabinet reshuffle. he has a new prime minister and what else will the cabinet look like? we will find out over the next few hours. this is bloomberg. ♪

guy: i am guy johnson and this is bloomberg markets. let's turn our attention to france with emmanuel macron shaking things up. he is reshuffling his cabinet today starting with an unexpected choice. x as hisming jean caste new prime minister who will appoint the rest of the cabinet. let's go to paris for more. talk me through what we know about jean castex. i had not heard this name much before for the officer prime minister. what do we know about him? what will he do? many people who have heard of him even in france.

he rose in prominence recently because he has been in charge of overseeing the end of the coronavirus lockdown. he is not well-known in france. he is an older, conservative guy who graduated from the top and the school of france. centrist and he will be able to carry out anything macron wants him to do as the top -- technocrat. >guy: why is this necessary? why are they rolling the dice now and lighting the fuse on a new government? >> macron has been talking a lot about needing to reinvent himself. that's because he's been under criticism for his government's

response to the coronavirus, for the unpopularity of reform and his handling of the yellow vests movement. crownl these reasons, my has acknowledged mistakes they says he wants to turn the page and all these things and he needs a new team to face the economic crisis that comes along with covid. person, i don't mean it in an offensive way, but he's like a safe choice, someone not very known, somebody who is center-right and will be able to carry out his agenda whether the with the pressing on pension reform were also turning a bit left to answer all the preoccupations and worries of the population in the wake of the economy prices. that will be his agenda next few months will be tough for this

new prime minister because of the crisis. he's easy to ditch because he's not very well known. how radical will the rest of the reshuffle be? how many of the current names and government's like the finance minister are likely to depart? >> we don't know yet. a lotors will be looking at who will be the next finance minister. that there isring one choice that is popular with the french. recentfared well in polls but we have to keep an open mind. guy: let's talk about where

edward philippe goes next. maybe he should think about his presidential run. could he be an ultimate challenger for the president? he is quite popular. i think he could challenge macron. he has a very strong electoral base among the centrists or the center-right. back tow, he will go his old job where he was one of members of the cabinet to win a mayor ship. he will decide whether he wants to run against macron in 2022. people around him have signaled and said he would help macron

basically rebuild his majority on the path to the 2022 presidential election. he is still young so he could even run for the next election. guy: nice to have that opportunity. the local elections, the greens did very well. how will that shape the thinking of the new administration? so well that aid lot of people were expecting a green prime minister to be appointed.0 not a lot of green credentials so they are waiting to see who will be the next environmental minister and macron has already made a plea to green voters by embracing if you proposals to make the

economy greener and he says he -- part of the recovery plan is stepping up the french economy to become greener. guy: thank you very much indeed for the update. we are looking for more information on the reshuffle. thank you very much indeed. a quick look at markets, negative toward the closing europe. to our, we will talk next guest on what is happening in the markets in the longer-term story. don't forget to watch the boston pops this weekend. this is bloomberg. ♪

guy: let's show you where we are. we have a lot market session. the united states is out. we are on holiday in the united states. equity marketsat that are negative. i don't think you can take too much in terms of the signal today from what you are seeing. ifumes are very light and you look the fair value, they are negative open markets. the chinese markets are very positive. we saw cfi 300 with a new high. we had very positive data early on. the u.s. dollar is flat. the debate continues to be economic reopening versus virus.