amazone: tech stocks, searching to record highs. equity markets and futures trade lower as concerns grow about a rise in infection and the rally overheating. deutsche bank and google planning a 10 year partnership on tech investment and cloud computing. we will hear from christian sewing shortly. welcome to "bloomberg: surveillance." i'm francine lacqua in london. the market is not only looking at the number of deaths across the world, but looking at what

is going on in terms of economic stimulus. european shares, slipping with u.s. futures, the dollar snapping a five-day losing streak. treasuries edging higher with most european bonds. a full market round up shortly. let's get to the bloomberg first word news with leigh-ann gerrans. leigh-ann: the u.k. will pump 3 billion pounds into environmental projects as part of its recovery plan. the investment will be formally announced tomorrow when gives anr sunak update on economic plans. he's under pressure to introduce a meaningful package after the prime minister's speech last week failed to impress many economists. emmanuel macron has reshuffled his government. bruno le maire stays as finance minister. improve labor

affairs, he's moving elizabeth .orne and ha appended thes national security legislation imposed on the city last week. her comments come hours after the government asserted broad new police powers, including warrantless searches, online surveillance, and property seizure. >> i'm glad to see that in the past few days, some have come to acknowledge the law will help promote stability in hong kong. you can see in the market, that has been the direction taken. leigh-ann: 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. i'm leigh-ann gerrans. this is bloomberg. francine: thank you so much.

coronavirus vaccine will likely be limited in how long it can shield infections, according to the u.s. infectious disease expert anthony fauci. the assumption is the protection would last until the end of the current virus cycle. another day, another nasdaq high. and shares lead the way stocks pose a fifth day of gains as investors put aside concerns spiking covid-19 cases might prompt another round of closures. to 6% of itsose record high from february. stocks and futures are trading lower. joining us to talk about the markets, partner and chief investment officer at london capital. when you look at the concerns, the virus and yet nasdaq at a record high. catchese economy that up with stocks or do stocks catch up with the economy? see techk we will related stocks be the

beneficiaries of the acceleration in trend. crises tend to accelerate trends. this includes tech enablers. it will be valuations that have to catch up with the economy, which is not firing as strongly as valuations would suggest. we have seen a powerful rally built on optimism. it has incorporated expectation and overlooked negatives and it is driven by an injection of liquidity and stimulus payments, assuming theyy is will be able to reach consumers to a more fundamental recovery. back int the bounds april and may -- the bounce in april and may was warranted but theacceleration suggests

odds aren't necessarily in equities favor. francine: if you had to favor equity and some equity investors, where would you look? what sectors would you be looking at? pau: i would take a barbell approach. of names a plethora that since april have been relatively left behind and i'm talking about sectors that are less exciting, a bit more boring, but they are able in an where down the years, stimulus checks will dry up and consumers go back to adjusting their consumption patterns. job prospects aren't going to be too good. in the future, we are looking at some of the consumer staples names, we are looking at big names which were the market has been going have been left behind.

there is another cluster of names, technology neighbors. perhaps a couple of names you've mentioned, which are trading at valuations which are discounting, but there are technology enablers that will be , remote learning, remote work. on one side of the equation, names that have been left behind and on the other side, secular trends that will be beneficiaries of tech names. francine: where do you see the most values away from stocks? what do you buy right now? pau: away from stocks, there would be two areas. banks, bank equities, which have

been very much hit and one of the most unloved sectors and perhaps for reason because banks are going to struggle to profite a huge amount of . over the last quarter, you had a suggestedorm that this rush for issuance of debt will be beneficiaries. sheet ofhe balance financial institutions offer great opportunities. i'm talking about debt issued by the systemically important financial institutions. banks are becoming or will become an extension of the fed and the treasury. the fed will be acting almost at continues tohat print that money. decidingury will be

how to allocate these resources and it will be down to banks to make sure those distributions take place. futurect the bank in the in more that type of scenario and that respect, i feel better lending my money to banks, buying debt issued by institutions. by all means, engaging in some of this financial debt. francine: what do you do with chinese assets right now? i don't know if it is something you have ever looked at or will in the future, but if you look at the chinese markets, there are questions of if it is overheated now? pau: what market isn't? clearly the depth of the market may be much more sensitive to intervention. it is a very intervening market, a market that will need to go

the injection on situation weinto a need to understand the landscape. -- china is looking better than it was. it is an economy that is very dependent. it hasn't yet been able to control their own domestic destiny. it is still very reliant on international demand, very reliant on trade to from -- flow freely. if chinese equity was to stage a it wouldn valuation,

be a more interesting point. the emerging-market equity long-termoffers opportunities. why would you look at the -- chinese market, or hong kong. that is an area where we are less than others. francine: pau morilla-giner of london and capital. christian sewing is speaking to our zero chief. -- euro chief. , moments ago, saying the investment bank is on track and this is an just an increase in volatility. sewing,g to christian some positive news continuing into the second quarter, especially in the investment bank.

sounds like the revenue figures deutsche bank will report later this month will have held up well. int is christian sewing conversation with our german bureau chief. follow the latest on our top line blog. this is bloomberg. ♪ -- top live blog. ♪ and happy with figures i'm overall positive, but it will be

francine: economics, finance, and politics. this is "bloomberg: surveillance ." i'm francine lacqua in london. we have an exciting webinar with the deutsche bank chief executive christian sewing,

speaking to our german bureau chief and talking about a number of things including the investment bank and how that is going. mentioned the last quarter could continue. if you look at the flows on volatility earlier in the year, it will be hard to repeat that our big news from christian sewing, the webinar starting moments ago, saying there is positive fixed income momentum continued into june. we will keep an eye on anything going on with this fantastic webinar done by daniel schaefer with the deutsche bank chief executive and we will give you any breaking news. the positive momentum has continued in the second quarter, from christian sewing. but kept the business flash with leigh-ann gerrans. --gh-ann: planning for bayer's plans have hit a snag. has tentatively

rejected the proposal. a hearing is set for july 24, his misgivings center on a 1.2 billion of the $11 billion settlement package. big tech is pushing back against hong kong's new security law. google, facebook, microsoft, and twitter say they won't process user data requests from the city government. the new legislation could criminalize protests and hurt human rights. google parent health of that says it will continue -- alphabet will review details of the law. surge is continuing. in five trading days, it combined the market value of general motors, ford, and fiat chrysler. in the time, its value has grown an average of $14 billion a day, roughly the value of fiat chrysler every single day. its recovery from the pandemic ofhelped by a second quarter

deliveries that topped estimates. that is your bloomberg business flash. --ncine: the ricky and european economy will be hit hard this year and take longer to recover, the starkest warning from european officials about the impact of the pandemic. the executive says a contraction of 8.7 this year, a percentage point deeper than predicted two months ago. still with us, pau morilla-giner from london and capital. when you look at europe, how bailoutyou worry about funds not being used properly and going back to a crisis in two to three years for some european countries? pau: we don't have a great tracker grabber -- track record of allocation. having said that, for the first i feel more years, confident about european prospects than u.s.,

--ticularly when it comes europe is having almost 75% less cases than the u.s., but for -- from an economic perspective, it is better positioned from eventual growth in domestic and export demand. largest economies, italy, spain, germany, are adopting a books while having wages supplemented. maintains the connection of workers to employers and once you have the recovery in aren't pickings up workers because the unemployment scheme pays them or not to work.

when it comes to the ability of europe, and looking at the continent as a whole in terms of fiscal ability, it is fair to pandemic tackling the on a sounder footing than the u.s., which has a more aggregate budget deficit. it all boils down to the ability of germany and france, some frugal countries. i suspect ultimately, this will go ahead and you could have not just the beginning of something a lot more cohesive, but give aral features that bit of an edge against the u.s.

and that is not common at all. francine: when you look at what we heard from christine lagarde over the last couple of days, she worries about deflationary pressures for two years. we are also looking at a great hero chart hillary clark did for us, but if you look at deflationary pressures for two years, what kind of european economy will we be left with? pau: i think we will have deflationary pressures around the world. structural stagnation where you have an aging population in europe and the u.s. in the system and more debt has been added to the bonds to deal with traded, insolvency, risk in the future, liquidity risk in the present. you have to talk about do i have enough ability to stimulate the economy and fight back

structural inflation. in the western world, we are converging into a situation not veryocity is strong, where demand is not very strong, where rates are superlow and consumers as a result feel not very compelled to spend, knowing prices may not be necessarily more expensive tomorrow. situation witha a fast-growing economy, but at least we see europe outperforming the u.s., which hasn't been the case in the last 10 years. inope went into a crisis 2012 and were beginning to recover when covid hit. the threat of deflation

is still with us, but france and germany give me a bit of a confidence that we will not -- francine: thank you so much. pau morilla-giner, partner and chief investment officer at london and capital. more from our conversation with christian sewing, chief executive of deutsche bank. this is bloomberg. ♪ >> you

>> compare the capital ratio, the liquidity, the working capital from function of corporates. inay, a lot of corporates this world, most of our clients improve the way they work with their working capital. they improve their capital position, the liquidity position, so i think the resilience of a lot of our clients is even higher than 10 to 12 years ago. then you have the unprecedented support from the central banks because we are always talking about the right action of the government, and a lot of governments have taken the right steps. i applaud what germany has done. i'm positive on the european steps which have been initiated over the last six to seven weeks, but they all work to intain the real pandemic

conjunction with the central banks measures. supportake the mechanisms, central bank measures, and improvement of balance sheet of our client, i do think there was a lot of resilience in the system. francine: that is the deutsche bank chief executive mr. sewing speaking to our daniel schaefer, talking about the momentum they've seen in april and may following the good momentum in the first quarter. mr. sewing, saying it continues. the investment bank he says is on track. plenty more from the webinar, plenty more from deutsche bank. coming up, we talk m&a. this is bloomberg. ♪

francine: this is "bloomberg surveillance." the deutsche bank chief executive, christian sewing, is speaking with daniel

schaefer, our bloomberg bureau chief. into --come continuing fixed income momentum continuing into june. ifsays they are assessing the wired card bank is an opportunity. i don't 100% know if he sees a payment system and sees that as something more that they want to get into. that we have seen over the last seven to eight weeks. let's get to first word news in london with leigh-ann gerrans. leigh-ann: the european economy will be hit harder than previously thought and will take longer to recover. it is the starkest warning yet from e.u. officials about the impact of the pandemic. the block's executive at forecast a contraction of 8.7% this year, a percentage point deeper than predicted just two months ago. italy plans to dramatically expand public investment. the nation's focusing on

boosting growth rather than raining in debt, as the government plots its way out of the worst recession in a century. last year the level was just 2.3%. any coronavirus vaccine will likely be limited in how long it can shield against infection, according to u.s. infectious disease expert anthony fauci. the assumption is that protection would last until the end of the current virus cycle. on a video conference, he warned we are still knee-deep in the first wave of the pandemic. are going to assume a degree of protection, but we have to assume it is going to be finite, not like a measles vaccine. so there will be follow-up in this case is to see if we need a boost. leigh-ann: global news 24 hours a day, on air and at bloomberg quicktake, powered by more than 2700 journalists and analysts in i'm than 120 countries,

leigh-ann gerrans. this is bloomberg. francine? globale: let's focus on m&a. european mergers and acquisitions, all he himself fallen to the lowest level in a decade as the coronavirus halts company plans. despite the crisis, stocks deals by european inquirers have bucked the trend. global us now is the head of m&a at deutsche bank. when you look at what happens to m&a, at a place where we have this almost complete lockdown in the economies, what will it take for m&a to come back? morning. i think for the first time in history, the entire m&a market -- for four months. over 130 billion of land done. look, that is between

march and may, m&a was really s't at the forefront of ceo minds. management teams started to focus again on the opportunity. billion, from0 120 billion the month before. for the market to come back, we need more certainty. for that, the two q earnings and the companies with expect develop an over the next six months will be absolute crucial. -- this these uncertainty with more clarity on the shape of the recovery, that would be the basis for a stronger second half and a much stronger 2021. francine: when do you think that would be? is there pent-up demand? do you think there are m&a

transactions that could have happened the last three-month that are on hold and could come back, or do we start from scratch because of the new reality? not starting from scratch. we are waiting for two results, waiting for effectively two companies -- we need to see two things -- number one, arch capital is companies need to make highly informed decisions on acquisitions. and a strong increase in domestic market consolidation. or the bankin media merger in saudi arabia. these are deals that are being worked on in the second half. francine: when you look at where you will see ma more activity?

on future lucked out and infectious disease? that rate will hold. if you look at numbers come on the outside it looks like there was a stronger line in the u.s. m&a volume than in europe. the first half of 2019 was the high watermark come and if you exclude megadeal's, volumes are down 8% in all regions. so clearly, wherever markets again is think the key predict ability. i think the area where there is the most activity in the next couple of months, other indices that are affected, technology, telecom, health care care, and infrastructure. what kind of questions are chief executives asking now? do they worry about funding? do they worry about pickup? do they worry about entering into -- i don't know if you call

anbad m&a transaction, but m&a transaction not because you see growth because you are frail, you have no chance but to merge? last 7, 8 years, because of uncertainty, the key question is the shape of the recovery. newmarket is bullish and that is a challenge for m&a because we don't have this in kind of clarity on the underlying earnings, and the key question is, how are techs going to -- onn there is a discussion what the potential roadblocks are -- covid, the u.s. elections, brexit? it is not just covid, but clearly covid is on the forefront of many people's minds. francine: do you think there will be cross-border, or will there be more domestic mergers overall? i know this is a great

generalization, but in terms of the appetite of what people want to do. side,on the domestic synergies are more easy to realize. be cross-border, but there is no reason why there could not be cross-border -- especially in europe, we could ,ee more domestic consolidation and that is also true for the u.s. francine: how much do you think this m&a would be merged because of the u.s. deals out there? because -- would surge because of the u.s. deals out there? dirk: i think it is less about being able to buy companies at an objective price. they have to be willing to pay full price, so i think it is more about the needs to do m&a or to develop companies. i think underlying directional

for m&a has not changed. that has increased with more consolidation in light of the changes covid has done to consumer behaviors and others. it is really driven by the underlying heat to develop business. see, when you you look at an and you say basically the m&a actions will track what kind of economic recovery, are people worried, the chief executives that you speak to, are they worried about a second lockdown even if it is not a full lockdown, but pockets of lockdown? when will things really start to normalize? is the key question. there are people that are very different from region to region. and very much depends on the whole market. it depends on the experience at home. ahead, the the risks harder it was hit, the more

concerns usually are there. thank you so much for joining us today, dirk alber's meyer from j.p. morgan. we're getting breaking news out oureutsche bank, speed to germany bureau chief in a webinar, talking about a number of things. continuing into june. i think he was just ask about m&a as well. leading into the themes that we were talking about with dirk. sewing saying wirecard is limited, and he doesn't want to get into any am a day where he would be in a jr. position in any deal. we would have -- we will have more from mr. sewing coming up. we will talk china, coronavirus, and plans for a new hotel with the chick executive -- with chief executive. this is bloomberg.

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francine: this is uber surveillance. let's get to the bloomberg business flash. leigh-ann: google and deutsche bank have agreed to form a long-term partnership. -- chiefyed executive executive krishan ceiling says it will be an important driver for the -- the u.s. tech company providing cloud computing services. liver has learned the two companies plan a joint -- bloomberg has learned the two companies plan a joint investment for 10 years. tiktok will be removed from local app stores in hong kong, the first internet service to withdraw after beijing enacted sweeping national security laws.

the company did not a spleen the reason for the decision. -- did not explain the reason for the decision. and samsung has reported better than expected profits for the quarter, as surging internet traffic helps demand for its chip. the tech giant was helped by gadget sales which started recovering from the coronavirus. the company will break down traditional performance later this month. that is your bloomberg business flash. francine? francine: the luxury sector has seen steady growth over years. withwill be a year to get the coronavirus shutting down main markets. pressing ahead with plans to expand its hotel presence. the company has just finalized an agreement to open a major new property in rome for 2022. undulated to be joined now by the chief executive of borg body. thank you for joined -- of borg

getty. when you look at your hotel business, how will hotel affect future openings, and how will you manage the business compared to the other things, watches and jewelry? >> good morning. the first thing is that the -- anywhereot all mid-2020 and 2021, rome in 2022, so those -- a couple, moving one into the united states, you can spread in the usa,

there is a chance with each of luxuryategies that the is important with potential groups, and that obviously we europe, weides asia, -- already to present with francine: were you able to compensate? you have had to close down your stores for a period of time. where you able to compensate with e-commerce? our customers also ok to buy expensive things online? when it comes to consumer or

, there arets products that very often you must try yourself before you -- we have triple digits in e-commerce, but e-commerce represents less than 10% of sales. so should we not offset the closure of stores, and our plan is to ask banned our network. demand, so this -- at the same time, if i look very quick recovery in to eradicate or

control the companies and resume , more than 30%, with growth in those countries, and brick-and-mortar, 25. so we are still with brick-and-mortar, that remains the bulk of the business. francine: you mentioned to. how worried are you about losing this financial hub in hong kong because of the recent laws? are you worried that international buyers will not go to hong kong as much? what does that mean for bulgari? of businesses -- the major

number one luxury company in the been a positive lining. to the point that the business we make in mainland china is now , as we all dorbed a stronger recovery. on the other end, reopening the borders with china which have been closed so that the chinese can go shopping, and be that for a truly social balance, it will be founded, compromised on the basis of that, and that does not really prevent the chinese to go of a badties for fear experience because no one wants to go into cities were obviously there is violence.

i know because of travel, you probably also had concerns in sourcing some of the gems used for jewelry pieces. how much of a setback was that for the supply chain, and when do you expect things to go back to normal? lockdown inow, the air travel has been on the passenger side, whereas cargo when it booming and comes to jim supply from countries, there is stremme like and business has there isn -- sacrifice.

francine: what do you see is the biggest challenge going forward? are you worried about having to close down boutiques to make up for lost demand, or do you think there is pent-up demand in the last three months that will come to fruition in bulgari stores? >> the first countries i mentioned already, china, were we see its of -- when not growing that much despite 10 weeks in that direction, and we see a second phenomenon, allowing 92% -- germany has been .he first one we are very positive with german people, meaning that they are with buying in the first quarter.

-- is not fashionable. -- there is, q1 is new worried that if you don't masks because stores are closed, they will be out of fashion. by july there will be another season. they all went live like you do in -- that is not an issue. -- not a product that within 2020. months, looking at the u.s. right now, i am -- most -- we have recovered most of what is lost.

francine: thank you so much for your time today. it was great speaking with you, john kristoff but been -- jean in.istoph babb we will round up the news from our live webinar. that is next. this is bloomberg. ♪

francine: economics, finance, politics. this is "bloomberg surveillance." i'm francine lacqua in london. let's go to dani burger. dani: i have been looking at deutsche bank shares and listening into the bloomberg seminars where we are listening to christian sewing. let me set the scene for the scenario in which he is speaking. we have seen deutsche bank be the best performer in the stoxx 600 bank index this year, gaining 27 percent, nearly doubling from the low. we are seeing the stock come off today, weaker by about 1% following this call. though christian sewing was bullish on the second quarter, saying the bounceback and markets in the first quarter would continue, but saying the

picture gets more blurry when you go out to the second half because you don't have the bounceback. from other things he said, he said it was too early to assess what the outlook was for wirecard with very little exposure, repeating that statement twice, perhaps for evidence. also pointing out there will be more m&a and they don't want a part of that. francine: dani burger with the latest on deutsche bank. this is what the markets are telling us. the markets are once against vote bashar once again focusing on these two factors. -- the markets are once again focusing on these two factors. the dollar advancing. more surveillance next. ♪ 49... 50!

i found you! good job. now i'm gonna stay here and you go hide. watch your favorites from anywhere in the house with the xfinity stream app. free with your xfinity service. now any room can be a tv room. stream live tv, on demand shows and movies

even your dvr recordings. download the xfinity stream app today to stream the entertainment you love. xfinity. the future of awesome. francine: summer sizzle -- tech stocks shine. the nasdaq and amazon surge to record highs.

deutsche bank says the trading boom will be difficult to repeat in the second half. more of our interview with chief executive christian sewing. in the e.u. forecasting a deeper recession this year. good morning, everyone. this is "bloomberg surveillance ." they webinar our german bureau chief did with christian sewing is very interesting. a couple things he did that he mentioned with european bank mergers, he did not rule out merging with anyone, but he ruled out being a jr. partner with any kind of coalition. talking about momentum -- mr. sewing talking about emerging markets. tom: he was no doubt polite. it was wonderful to see that effort out of our german team. it is real simple -- what didn't come up is the elephant in the german