♪ is bloomberg "daybreak: europe." these are today's top stories. in. stocks surge with gains tech shares pushing the nasdaq to a record high as investors shrug off concerns about the growing number of coronavirus infections. microsoft joins google, facebook, and twitter in pausing government user data requests.

and, macron reshuffles his government. the european commission releases its growth forecast today. manus: it is just gone 6:00 a.m. in london, 9:00 a.m. in dubai. are knee-deep we in phase one. we are knee-deep in a global rally, that is for sure. half $1 trillion off the chinese market yesterday morning. if you have had a 40% leg up in the equity market, what is it that you want to do? .on't chase the rally, they say nejra: it is interesting because yesterday, you wonder how much of the rally in global equities that you pointed to was actually

driven by what happened in china particularly. of 2015.he bubble you talked about how much was put on in terms of market value. then you see the nasdaq hit a record. s&p 500, five days of gains. as you say, not much really driving that rally. we will get into it with simon allard at the moment. he talks about, is tech in a bubble? return, a total bubble within a bubble within a bubble, within a bubble. keep going. us a: people keep telling bubble is not supported by fundamentals. it is supported by fundamentals.

always love to get an update on your pension. , sort ofuphoria flatlining when we look at the asian equity market. we continue to see gains. u.s. and european futures, in terms of looking elsewhere in the markets. not a lot actually in terms of the bloomberg dollar index, near one month low. that sort of speaks to the risk on as well. the 10 year yield. we don't really see a lot of reaction there either. dad steady on a 68 handle. manus: it's interesting they talk about sort of steadied a little bit. this is first word news, it is just gone 6:03 in london.

any coronavirus vaccine will likely be limited in how long it can shield against the infection that is according to anthony fauci. it wouldption is that last until the end of the current virus cycle. dr. fauci warned that we are knee-deep in the first wave of the pandemic. fauci: we have to assume that it will be finite, not like a measles vaccine. so there will be follow-up to those cases to see if we need a boost. nejra: --manus: in france, emmanuel -- president emmanuel macron has reshuffled his government. bruno le maire remains. jean-yves le drian as foreign minister. pompii ased barbara

the minister for economic -- for ecological transition. hong kong defending the national security legislation imposed last week. carrie lam's comments come hours after new police powers that include warrantless searching, online surveillance, and property seizure. >> i am glad to see, in the past few days, that some have come to acknowledge that it will help to promote stability and prosperity in hong kong. you can see the markets, that has been the direction taken. manus: global news 24 hours a day on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. so, we have had a lot of unique

and exclusive conversations across the bloomberg spectrum. newof those, discussing the 3.5 billion special opportunities fund, designed to sweep up debt and equity in companies that have been heard by the coronavirus pandemic we spoke to -- erik schatzker spoke to the ceo. >> i think we have to all be very careful that we don't conflate the markets and the real economy. while the technicals and all of the liquid markets the fed has been supporting are fantastic, if you peel back and look at these fundamentals, the recovery is uneven. >> where is the fed liquidity not reaching? where are things attractively priced? >> we have been able to find

distressed opportunities in the first order impacted industries like travel and leisure, advertising, travel and entertainment. if you move to the second order, two places. one, where is the liquidity not finding its way? there are certain pockets of the mortgage market that have not been supported. some small business loans. some middle-market corporate loans. there are pockets of the markets that have not benefited from the fed liquidity. that is where we can come in with our own liquidity and provide that support. even though the liquid markets are functioning, there are a whole host of private companies that never really prepared for a world where there was zero revenue. , everyone isompany now liquidity planning and thinking, how can i build a bridge to the other side of this

crisis? >> you started out with a $2 billion target. you exceeded it considerably. why not more? the reason i ask, firms that compete with you are raising multiples of that, north of $15 billion. why wouldn't it want to raise the funds? >> we are. we tend to be a little bit more diversified in the way that we raise capital. on our first quarter earnings call, we told the market we raised close to $7 billion of new capital. in the second quarter, we have raised an additional $6 billion of new capital. this particular strategy was 3.5. fundraising across the platform continues at a pretty healthy clip. most of the strategies where we are seeing increased fundraising are able to play the market dislocation in some way.

>> any idea how much you can raise over the calendar year? >> pre-covid, we expected to hopefully exceed our record year a year ago of 36 billion. as i just mentioned, we are about 25 billion run rate. our first quarter earnings call or expectation would probably be within that range. >> there is a significant gap in the performance of your areas capital corporation and the high-yield market. the high-yield market has almost come back. just about at the level it started the year at. the capital corporation is still trading at a significant discount. what explains that? >> i think it is a perfect example of what i just articulated, the difference between the technicals in the liquid market and what is going

on in the fundamental economy. i think what is going on is folks are looking at the bdc irket and essentially saying am buying or expressing a view on middle-market credit. we as an investment rated company with against of dollars of liquidity and a pretty solid investment-grade liability structure, are very well positioned to continue to perform through this stress. coming up on the show, china's stocks have rallied the most in a single day since 2015. we discussed the velocity, right here on bloomberg. ♪

it is "daybreak: europe." quick smattering of risk this morning. such a ramp on the upside. brooks seven aan little bit earlier on. roaring success in the equity market in china. left rates rba unchanged. they talked about them being just as bad as they thought. bank of america warned you are going to find it hard to go higher on this. serious re-engagement with the market. 50 to 115. gold flat, 1784. samsung, the topline numbers beat the best of the beat. the stock was down 1.28%. just did not deliver

bobs, thets and technical term. iphone.pad or nejra: it is very english. you have not said that since you moved to dubai. let's stick with tech. another day, another nasdaq high. we got to a record, tech shares leading the way. that was s&p 500. this comes as investors put aside concerns that covid-19 cases might prompt another round of closures. amazon, $3000 for the first time, the stock rose amid accelerating demand for e-commerce and cloud computing services, a trend analysts expect outlast the pandemic.

streetly has wall prognosticators left in the dust. targetrage analyst price , $2810. simon ballard is not a per class -- not a procrastinator or anything else. he is chief economist at first abu dhabi bank. good morning. can i just ask you? when you look at the kind of market moves we have seen in china, in the u.s., i want to just focus on tech. you are looking at bubbles within a bubble. you have got a mountain of stocks that are rocking it out. genius brands, workouts. a bubble within the bubble, within tech. what do you reckon? >> there probably is to a certain extent, but the reason we are seeing the tech sector performance strongly as it is,

not only are we facing unprecedented uncertainty, but even at the most sort of generic view is that we are moving into a new normal. that new normal will be based on technological communication. are reallympanies the winners in this great saga where there are obviously many losers. that is what is creating the bubble. particularly you run the risk of a second -- a second spike at some stage which would only accentuate the need for social distancing and e communication. nejra: if we do see a second wave, or rather if investors get more concerned about a second wave than they are right now, what does that mean for the stock market on a headline level?

if it keeps pushing into tech stocks, they make up such a huge part of the market, that i guess you would not see too much of a drawdown. simon: if you look at how we have performed so far through the first wave, we have continued to push higher in terms of monetary stimulus, increasingly exploratory fiscal stimulus. my question will be, for a second wave, with interest rates at zero and the fiscal accommodation already largely deployed, we can keep redeploying. morey see sort of a negative reaction to risk assets, equities, credits alike on the back of that. but that is to be seen. part of the discussion we were having yesterday, where is the next movement?

we talk about this warning of a 40% rally being sustained again. bonds have been compressed by 40 basis points. if you look at the next half of the year, the guest actually was high-yield towards relative to the next move in equities. i think what we will see over the second half of the year, if i am right and we start to transition into a shallow u-shaped recovery, the shape i feel we should move through if to be sustainable, in that instance we will start to differentiate a little bit more. we have already seen the reese steepening.- the re- within that, i think the compression of the quality curve from ig and high yields, this hunt for yields we have seen

over the course of past several months on the back of central bank and government consolidation, we will get a re-steepening of the quality curves of the second half. if it is a v-shaped, we don't get that differentiation. at the risk is that v becomes w and you get a much more abrupt reaction particularly in the high-yield. if restrictions get reimposed, i think the second is more severe. in that scenario, i want to ask about the differentiation between risk assets geographically. is aat scenario where it u, w, will investors rush to the u.s. as a defensive market, or do you see them moving to other

parts of the world geographically even as right now we are becoming aware that second wave risks are really quite high in the u.s.? simon: you also have the added uncertain the of clinical risk in the u.s. as well over the next six months, shall we say, at least. i think there will be a degree of movement back into the u.s. but also some hesitancy that will help to shine a spotlight on central european, eastern, middle eastern, and asian credits. possibly not china at the moment if anyone is sensitive to that. you will get a more geographically diverse asset allocation play rather than your tricia newbold -- then your traditional investment strategies. nejra: simon bellard, chief economist at first upper darby bank, stays with us.

dhabi bank. chinese stocks gaining the most in a day since 2015. we will discuss what is driving the market, next. this is bloomberg. ♪ ♪

bloombergs is "daybreak: europe." let's take a look at some of the key events coming up this week. the u.k. chancellor will be answering questions in the house of commons later today about a key statement tomorrow where he will outline measures to help stimulate the economy. manus: we also get cpi data from

china for june. friday, a little bit more data as stronger figures out of france and italy from the mid of may. that is when restrictions were eased. under china's national security law. everything from warrantless search, online surveillance, property seizures now come into effect. stock, a bullng market despite the political tensions. mainland equities also in the spotlight after an unprecedented rally. simon ballard is still with us. we were talking about it, .onday's search added we saw yields moved higher, increasing that spread over

equities. simon: i think china generally theuncertainty for me, relationship of hong kong company hong kong-u.s. alliance. general fixed income probably looks more attractive than equity at this stage given that uncertain back from. generally, the assumption contained in that part of the world, fueling the more positive sentiment towards china. tremendousthe beginning of the week. manus: when you look at the global flow of money, you have the political dislocation, trade wars. brent mcgonagle was with us a little bit earlier. he said he will need to see a

fine of around $1.5 trillion to get to equal weight. can you envision a scenario where you as a foreign asset manager would go for me 3% ownership of a bond market to something much more material given the backdrop? simon: in the short-term, i would say no. but things are moving so rapidly in the moment, the economy and geopolitical risks around the globe. to go from 3% to something more significant would be quite a dramatic move at this stage. factors asxternal well as the underlying driver for that particular market itself. rally with chinese equity we have seen over the past few days, a lot of that has come through with commentary from

state media and also perhaps with the whole team providing support to that market. but also, there has been a preference for tech stocks. when you know the reason, does that reassure you for chinese equities, or make you a little bit cautious? simon: that comes back to manus's question a little bit early on, when is a bubble a bubble. it gives me some form of confidence that there is a degree of sustainability given that we believe going forward the new normal will be supported generally with the new social distancing, the new paradigm we will be living in. at the same time, there will be many sort of tech stocks that do not exist that are listed on the coattails of the virus. manus: simon, hold those

thoughts. we are going to dig into a little bit more of the news flow. simon ballard, chief economist at first abu dhabi bank. eu publishes forecasts. this is bloomberg. ♪ ♪

♪ manus: good morning from dubai. i am manus cranny. they reach a pitch alongside me ehic alongside me in london. tech shares pushing the nasdaq to a record high as investors shrug off concerns about growing numbers of infections. big tech puts hong kong on notice. ,icrosoft joins google facebook, and twitter in pausing

government data requests. this as hong kong is given sweeping powers under china's national security law. emmanuel macron reshuffles his government. releasesean commission its growth forecast today. well come to "bloomberg markets." what is more of a bubble? chinese stocks adding $460 billion of market cap in one day, or tech stocks at another record high? manus: a bubble within a bubble, faang-itisckitt, the we suffer from. big movers within tech. citigroup warns, don't chase the rally. nejra: that rally certainly continued yesterday after he weekly gain in global stocks.

a little bit of a pause today. but it seems like everyday we question how much further the rally has to go. with all of the stimulus out there. manus: three names that just chime in my head. course apple, and of tesla. we will talk a little bit more about those names in a moment. the yuan strengthened on the back of that rabbit rally in chinese equities. let's have a look at the market. the s&p futures back by one third of 1%. dollar-yuan, we did make it below seven the question is, have we opened up a new trading range. the aussie dollar is back my 1/8 of 1%. the rba make a number of different headlines. the downturn has been less

severe than earlier anticipated. roll overcome have a look at gold and samson samsung is down a couple of idiosyncrasies added to the top line number. host, says heuest expects further steepening in the curve. nejra: the market cap of apple and microsoft is 57% greater than the small-cap index, the russell 2000. it was another day, another nasdaq high. tech shares leading the day and helping u.s. stocks posted a fifth day of gains. might prompt cases another round of closures. said, thezon, as you stock rose, accelerating demand

for e-commerce and cloud computing services side of the business. a trend that analysts expect to outlast the pandemic. the company's rally has wall street prognosticators in the dust. the average price target, $2810. commissioneuropean releases its summer interim economic forecast this morning, which covers annual gdp as well as inflation for the coming year for all member states. fromeporter maria is live russell's. what will these forecasts tell us about the coronavirus fallout on the european economy now that many of the economies in europe are reopening? >> you look at the initial forecasts put out by the european union two months ago, this is still a very difficult

time. we did not know if european countries would be able to open up for business. there were severe disruptions to the supply chain. at that point, the european commission was predicting a 7% decline for the european economy. it warned it could be much more severe in southern europe. course, the situation has really shifted from that point on. infections have managed to stay in check. we have seen european economies opening up. almost returning to something that looks like oral. so we could see the european commission perhaps be more optimistic. incan also see them factor the fact that the policy debate has shifted. of course, the recovery fund very much on the table, that

they would not have to pile in more debt. you could argue that could be very good for their economy. the government definitely thinks that could be very good for them . manus: good morning to you. some of those numbers in terms of economic contraction are quite staggering. nearly 10% increase. the state of the markets. let's talk about the condition of the recovery fund. the approval. the tragedyst like of europe. battering a consensus. where are we? >> we know that this is going to be incredible. , it is a majore breakthrough if it happens. he were talking about 500 euros that would be given out to countries hit by corona.

he would also see collective debt, a watershed moment. but it will be tricky from now until that deal happens. angela merkel will be in brussels tomorrow. she is going to make a big pitch tothe european institutions say the recovery fund is a way forward to protect the markets. european leaders also meeting for the first time face-to-face since the coronavirus happened, it is going to be tense. the twonce and germany, biggest countries, are saying we want a deal before the end of the summer. we want to see the fund taking shape before the end of the summer and being handed out at the start of 2021. of course, that is when a lot of that original fiscal stimulus and saving the economy perhaps draws to an initial tapering. maria tadeo.

stay tuned because at 10:30 today london time, we will speak to the european commission economy minister. back to our part of the world, saudi arabia, the central saying that he sees light at the end of the tunnel. consumer spending has picked up, although there is still a need to remain vigilant. he spoke exclusively with my colleague about the outlook for recovery. >> i think it is too early to say a v-shaped. because, barring any downside risk coming from the second remain --example, we we see light at the end of the tunnel. >> since the coronavirus hit, you have stepped in with all kinds of liquidity support

programs. some of them are due to expire in september. what happens then? do they get extended? >> we have a program of support that has three elements. thefirst one was targeting deferral payments or the funding for lending. affordable costs. paid whereuarantees we guarantee -- for them. the earlier program, the payments, was very successful. 70% increase on that amount. the second one was the injection of liquidity, 50 billion saudi afterwhich came later on opening the economy june 1. the aim was to enhance the banking liquidity and enable the banks to lend more. roomhas given banks more

in terms of liquidity. the third one was the open market operation, which .ommenced at the end of june we have plenty of liquidity. back to your question, we are still reading all of the indicators. a real sectorn when it comes to the program particularly. >> last time, you did not to give you, then we had the deal rise to the tune of billions of dollars. in you encouraging more m&a this sector? >> we see the mn day as a signal of dynamism we do not see how the two institutions find themselves. and weue to the sector,

agree with that. they add value to the economy. notfirst merger, which did take place, we agreed, when they showed intention to merge, and we agreed when they showed intention to separate in the deal. agreed, whenso, we they showed intention to merge. still thisber that is the initial stage. in the process of the merger and acquisition. and it will be subject, by the all to the approval of regulators including the general authority. >> governor, the saudi foreign currency reserve has been front and center for much of our coverage, including the lower oil prices. we are still is a lowest level since 2011. on thatthe recovery

front? now, 450see it right billion euros, with around 40 about 80% stock of money. we did not see significant changes at the end of this month with that luminary data. course, what of impacted this was the $40 .illion saudi read of assets support our reserve, as you can tell, if there is more positive signals coming from the oil market, which we see them right now. the saudit was central bank governor.

now let's get to the first word news. against is pushing back hong kong's new security law. , andook, google, microsoft twitter say they will not process user data requests. concerns that the legislation good criminalize protests and hurt human rights. in brazil, president jair will undergo tests for covid-19. the president is taking hydroxychloroquine, which has been touted to combat the virus but its effectiveness has not been proven. samsung has reported better-than-expected profits for the quarter. the tech giant was helped by gadget sales, which started recovering from the coronavirus slump. global news 24 hours a day on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries.

manus: coming up, we are going green. the u.k. chancellor extends his recovery package with a plan to spend billions on environmental projects. what is next? is it enough? this is bloomberg. ♪

nejra: this is bloomberg "daybreak: europe." let's get a quick look at the risk radar. asian equities taking a pause. chinese equities taking a gander. market cap yesterday, five days of gains for the s&p 500. nasdaq, record futures.

the 10 year yield is absolutely steady. back, the aussie, and oil retreats slightly. the u.k. plans to pump 3 billion pounds into green projects to protect jobs. chancellor will outline the details when he delivers an update tomorrow. the artsa lifeline to and culture, venues to the tune of 1.6 billion pounds. still with us, simon ballard. we are hearing a lot ahead of chancellor's announcement on wednesday. pumping money into job centers. what is the point of advice if there are jobs available -- if there are not jobs available, you may wonder. i wonder how many of the jobs in the u.k. will have a real of --

real effect or are just there for show? simon: it will buy time. the furlough steam -- the furlough schema, if it gets extended in october, the illusion that the furlough scheme will for many just be delaying the inevitable redundancy. the job centers will be desperately hoping that jobs are created. interestrest rates or rates down near zero bound. pump the economy back to life over the latter half of this year and the early part of next year. manus: that does not paint a very optimistic picture. recession when we come off furlough, what is the risk? even using the word depression?

simon: that is the risk. given zerotic view, interest rates, that there will be a global uplift in the second half of the year. if you look at the expectations for global gdp this year, there is a consensus building, 2021 for be back into territory different degrees. imf looking for a significant rebound up to positive growth next year. , i think youterm have to suggest that there is greater downside risk than upside risk. market seems to be reflecting that. investors have piled into gilts. yields are close to those in japan. traders are again setting on negative rates in 2021.

a really interesting thing. you've got an absolute divorce between fundamentals and valuations. you have equities toward all-time highs. bond yields being well and truly anchored around historic lows. in the u.s., 50 basis points. yields as well in the u.k. the bond market is pricing in the uncertainty, whereas that is what bond markets do. bond traders are born to be perish. equity traders are born to be bullish. assuming the recovery comes and will be sharp for imf predictions for next year, the bond market is taking a slightly more cautious view and needs to see the proof in the pudding

first. manus: you know who makes the money first? the fx traders. don't ever forget the fx traders. ballard, chief economist at abu dhabi bank, thank you for being with us. so, mr. macron is picking his new government. rebuilding the french economy is a priority. without,s who is in, who stays. bruno le maire. this is bloomberg. ♪

this is bloomberg "daybreak: europe." the french president emmanuel

macron has reshuffled his government. the move leaves familiar faces and most pivotal roles. bruno le maire retained his position as the finance minister with the additional goal of managing france in a post covid-19 recovery. tracking the moves from paris. good to have you with us. the key figures in the new french government. who is in, who is out? of the big players remain. bruno le maire, the finance minister. him inministers to help economy. gerard darmanin remains foreign minister. he keeps his job as well as the defense minister.

three significant changes. nowinterior minister is gerard darmanin, very young, very close to macron, and a sensitive position where you have protests against police. pompili,have barbara the environmental job, it that is an important position as macron wants to make the recovery green. nejra: given that the cabinet has been more tweaked then massively reshuffled, what do we expect the focus to be now? is it all going to be about recovery? reform?ut >> hospital salaries are still considered too low in france.

they have been considered vital for the nation during the crisis. macron has also talked about making some adjustments to the pension reform. they have said this is not the time, we need to focus on the economy. of course, that is the big thing this new government will have on its plate. we build the french economy, make this recovery stronger. that is one of the reasons the , especiallynister at a time that french gdp is expected to contract at 7%. the jobless rate could also increase below 11%. nejra: getting a quick check on the markets. nextdline that the she index -- that the chinex in

china extending gains after that massive rally yesterday. that is it for "daybreak: europe ." the european open is up next. this is bloomberg. ♪

anna: welcome to "bloomberg markets the european open." today, the markets say all hail the mega caps. america's biggest companies propel the nasdaq to another