francine: deal done, eu leaders agreed to a 750 billion euro recovery package after four days of intense negotiations. it,seeing the crisis behind as they consider shareholder payouts. novartis trends its sales forecast on pandemic disruption. the chief executive tells us he is cautiously optimistic about a covid vaccine.

good morning and welcome to "bloomberg surveillance." i am francine lacqua in london. arkets are moving sideways little bit, but optimistic about things to come. overall, a lot of focus on the markets. dollar weakening, but stocks advancing globally. aussie equity futures up after european leaders reached a deal on a landmark package. equities rising also across asia. australia outperforming. days of tough talks, european leaders agreed on a landmark stimulus package that issue 750he bloc billion euros of emergency debt. grants,ion euros in less than the 500 billion euros the french president and german chancellor included in the

earlier draft of the proposal. the deal represents a victory for a collective you response. joining us now from brussels is a reporter maria tadeo with the details. maria: we do have a deal and a whole package of 750 billion euros. the grand component which had then problematic now confirmed, 390 billion euros. the breakdown by country is interesting. italy and spain will be the biggest and for the recovery fund. get 82 billion euros, spain will get 72 billion euros. when you go back a few weeks when the debate was about a esmcal bailout tapping into credit in, that will remove tension we had seen in the market that is

reported today in yields. it is good news for emmanuel macron and angela merkel who have pushed for a collective response, and we are getting one today even if it is watered down. have at the center of the debate and are getting a bigger rebate for the next seven years. it is your typical european compromise where every country will tell you it is a good deal for the government, the taxpayers and an overall good thing for the european union. francine: thank you so much maria tadeo in brussels. joining us today is andrew sheets, managing director / chief cross asset strategist, morgan stanley. a momentouse you on day. when you look at the stock market performance, they seem ok with the deal. how long can it last? andrew: it is important to step back and appreciate this is a big deal, very significant.

it has been surprisingly close to the initial proposal. it has happened fast. call it morgan stanley was optimistic about the deal getting done, we still thought tomay take a second session finally wrap things up. the fact they did it in this round is good news. to the european story where european assets have lagged for a long time, generally cheaper. i think we can see sustainable outperform it from the euro, european equities, for the coming months. the bigger concern is this is one of several positive things happening in july along with earnings season and another u.s. fiscal package. once we are out of july, those positive events are behind us. i am more concern for

august-september, what is the next catalyst to take the market higher. francine: you argue over the next two months, the positive near-term risks emerge. what does that mean for stocks? andrew: it will be the tougher period for stock markets. there is the old saying it is better to travel than arrived. i worry into august you have arrived with these factors that we are having a good earnings season now but that will be behind us. we have had a successful european summit, but that will be behind us. we think the u.s. will pass another round of fiscal stimulus at the end of the month, but that will be behind us. good news on vaccine development the phaseging, again, one data will be behind us, and it will be some time the market has to wait for the results of

the phase three trials, which we may not get until october. it is that gap in news at a time when we think there are rising risks that the economic data momentum softens a little bit. you are into a period for u.s. assets, august, you can often see worsening pre-election performance, the market starts to care more about the election and it is harder for people to take on investment ahead of the election. a lot of investors decide to wait to know the result before making the next investment. francine: what are your top picks? where did you find value from here? what strategy should we be looking at? think complicate this, i would love to say we are the

only ones concerned about a slowdown in growth. i think the market is very concerned about a slowdown in growth. you see that were volatility is. you see that in how much defensive stocks have outperformed. it would do a lot of good to hide in those places that are already expensive. i think you're up across asset basis is an appealing place to hide out. i think this recovery fund is here and will be here for a while, valuations in europe a reasonable. you do not have election related risks. cash, corporate bonds have a positive dynamic behind them and that you have heavy issuance of this debt from april through now as companies have rushed to grab financing while available. we think that slows a lot and

there will be fewer bonds coming into the market which could help them performance and supply-demand balance. francine: do you buy what guy?ral banks is that a good strategy? andrew: in credit that is, you can have a dual dynamic that central banks are supporting the markets, providing a backstop for the market, and supply has been slowing down. the tough thing, the government bonds side, central banks have already pushed real yields down to record low levels. that reduces the risk-reward. i am curious because i think it is hard to tell where expectations are for the fed meeting next week. we do not expect the fed to announce any major new action at

that meeting, that is our expectation, but investor expectations are varied about what they are expecting to the extent they do not do anything, does that come across as a disappointment is a big unknown. francine: thank you so much, andrew sheets, managing director / chief cross asset strategist, morgan stanley. coming up, a big rally in the nasdaq. this is bloomberg. ♪

francine: economics, finance,

politics. this is "bloomberg surveillance ." still with us is andrew sheets, managing director / chief cross asset strategist, morgan stanley . what do you do with technology stocks now? we have been more cautious on this sector, and -- the market is moving the other way, the sector is very strong. we are focused in the near-term on a specific issue, we are into an earnings season that has gone pretty well for companies that reported. the big tech names have not reported yet, they are reporting later. not only are they reporting later, they have not had their expectations be cut as much as a lot of names that have reported. i think this will be an important earnings season

generally, but especially for a lot of the popular secular growth and tech names where earnings expectations have not market iswhere the expecting them to be, they are immune in some ways to what is going on. that may be the case, but it may not be how far-reaching the implications of the virus are. our concern is those estimates causes high, and that disappointment through the earnings season. francine: is that for all tech or big tech, or is there a different between asian tech and the u.s. tech versus the europeans, although we do not have many european names? andrew: i think this is an edge for europe, because you do not have the same issue of overly optimistic earnings expectations. in europe earnings have been

slashed dramatically. think in the u.s. you could take a large differentiation in tech names. you will see names to work areugh this and show they less cyclical and immune, they are benefiting from this new environment we are in. our concern is there will be enough names whose business models will prove more cyclical. morgan stanley analysts did a large survey of cfo's. a result of that survey was a sizable indication that companies are planning to cut their technology investment, given companies are forced to cut costs. to us, that indicates the sector might not have the halo, the

non-cyclicality that is expected of it. francine: does that assume once we have a vaccine or once this dies down, we go back to working the way we used to? andrew: yes, i think there is that assumption. the longer-term picture in the fascinating, you had positive vaccine news yesterday. at morgan stanley quite constructive on the prospect that a vaccine ultimately will be successful, we will see one in wide circulation. you look at the bond market and the way it is pricing growth versus value in these secular growth names that have benefited from the current abnormality. names in arkets are

world that does not return to bond thatry low yields, flat curves as far as the eye can see. i find that the biggest disconnect with a vaccine optimism. the more optimistic you are on a vaccine, the more optimistic you should get about the world returning to something that looks more normal. it will not go exactly back to the way it was, but more normal than is currently priced in. francine: what do you do with gold now? different takes. gold seems to be the one to watch. andrew: narratives matter, stories matter, and gold has an excellent story behind it. you have an environment with central banks are making policy easy where the dollar is set to weaken, that is our currency call at morgan stanley.

with uncertainty, that benefits gold. the challenge especially now is translating that into more quantifiable justification for the price. you can argue the goal strength you has is going further and farther what can be explained what is happening with the dollar or yields. i think the story is still good, i do not see that story changing in the near-term. i think what would change potentially that story is going back to our previous question, the better the news that comes out on the vaccine side, the better indication things go back to normal, that would start to undercut the gold narrative. i do not think that changes in but int month or two, terms of expressing those themes, i would prefer to do it short the dollar itself rather

than via an instrument like gold. francine: thank you so much, andrew sheets, managing director / chief cross asset strategist, morgan stanley. coming up, ubs has signaled a return to buy back and dividends. we will bring you our interview with the chief executive later in the show. this is bloomberg. ♪

francine: this is "bloomberg surveillance."

i'm francine lacqua in london. european leaders have agreed on a landmark stimulus package. joining me now is guntram b. wolff, director, bruegel. you think this is a positive deal. if we have not had a pandemic, with a has signed off on this? guntram: no, i do not think so. i think the pandemic was the trigger that allowed us to move in a different game. this is a different game, this deal. for the first time it establishes a true insurance mechanism to where countries receive grants from the european union, and the european union borrows money in the capital market. borrowing for grants is something that was not foreseen in the eu, and now it exists. a president has been

established, and it has paid out . -- countries hit hit the hardest economically will receive the largest part. in that sense it is a big deal, and it is normal to take four days to come to that deal given how new it is. deal, whativen this will europe look like in five years? if this is the first step toward integration? a step: i think it is toward fiscal integration, no question about it. everybody wants to emphasize especially northern countries that this is a one-off, it is done only because of the pandemic. and it is just a one-off thing,

but of course it establishes the president of long-term borrowing ent of long-term borrowing. t has beeneceden set, so if there is a new pandemic or whatever strikes five or 10 years down the road, this mechanism can be reactivated and new borrowing andbe done in the markets, we paid out to the member states. it is a step toward a more federal europe. francine: what have we learned about alliances in the european union over the last month? traditionally it was the franco german alliance. does it still hold? do they need to be more inclusive with the nordic countries? guntram: i would say they got

their way. france and germany made a big opposable and to a large extent that proposal still went through. they really put the so-called frugal four into desperation, especially the netherlands. worried thetremely moment the u.k. decided to leave the european union that they would be left alone, and germany would become almost french. -- the new macron made a big emmanuel macron made a big turn. it was a nightmare scenario for but i think in, the end they saw they cannot block progress forever, and in the end they agreed.

they got their rebates prizerced, which is the germany had to pay to them to get them to agree to the deal. francine: thank you so much for speaking to us, guntram b. wolff , director, bruegel. novartis -- we will speak to the chief executive. this is bloomberg.

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that's why we're helping you stay ahead and adapt with a network you can count on, 24/7 support and flexible solutions that work wherever you are. call or go online today. francine: economics, finance, politics. this is "bloomberg surveillance

." let's get to first word news with laura wright. on 760a landmark deal billion euro of stimulus, the --ck issue joint that to the package includes 390 billion euros in grants and 360 billion of low interest loans. the agreement comes after more than four days of negotiations and required unanimous approval. u.k. households are experiencing the biggest income shock since the 1970's oil crisis. that is a stark warning from the revolution foundation. it happened after rishi sunak forecast more job cuts this year . novartis is trimming its sales forecast for the year as the pandemic has hit demand for some of its medicines. sales are expected to growth -- to grow by single digit percentage. the lowxpanding in

several digits. have a broad internal research effort to buy coronavirus medicine, but across these medicines we are not looking at this as a profit driver. we have committed to do this for more of a humanitarian standpoint. added $13f bezos billion to his net worth yesterday, the biggest single day jump for any individual since the bloomberg billionaire's index was -- bloomberg billionaires index was created in 2012. figure would make him the seventh richest person in the world. global news 24 hours a day, on air and at bloomberg quicktake, powered by more than 2700 journalists and analysts in more this is countries, bloomberg. francine? francine: shares of centre again, -- of center again have soared within 500% of the past

two days after the couple said experimental drugs cut the risk of covid-19. patientsical trial, needing ventilation dropped 79% for those who got their drug versus a placebo. is richardxecutive marsden. atre was -- do you think this point that the data is good treatment to be authorized in emergency room? richard: i cannot answer that question until i have spoken to the agencies. the data we put out yesterday was the result of having those people in hospitals, 100 patients in clinical trials. we have good data that we are pleased with. we have two complete analysis of

that data and work out what additional data they need to consider approving submission. francine: how much more data do ?ou think they require i am not a virologist, and a lot of people watching are not virologists. do you know if the trial actually met its primary endpoint? give us a little bit of flavor of what you think happens next. richard: we are pleased with the data. -- at the other end of the scale come on the end point that we are assessing, the sale proposed by w.h.o. in february improved the also chance that you can recover to a level of no limitation of activity or better with this truck. we could not have asked for more from this trial.

the question is a very good question, and i have to put that to the agency. until we've got that information, it would be wrong for me to speculate. francine: how quickly are you having these conversations with regulators and agencies, and how quickly will you get a response back from them? richard: things are happening very quickly. u.k. regulatory agency, has been fantastic to work with. i am supportive of this -- they have been very supportive of this clinical trial. we have talked to the ema and the fda and they are processing things quickly. we're talking weeks as opposed to the normal months turnaround for this sort of engagement we need to have next. francine: so everybody understands, once you get approval, if you get approval, then the drug and the nebulizers used to deliver it need to be produced and manufactured in large quantities.

if you do give a -- if you do get approval, how quickly can the rest be done? richard: time is the challenge here. what we are doing is technically something that, you know, is a well-traveled path, and recognizing that time is a challenge, we started all this activity back in april at risk, only assumption -- on the assumption that we would get the data. the aim is to provide hundreds of thousands of treatment courses, which would be millions of doses. that is what we are aiming for. francine: do you have enough manufacturing capability at the moment to do that, or do you have to join with someone, go into partnership with someone else? we contract, manufacturing -- we contract manufacturing outcome and we have been doing that for the last several months to hit that target that i just talked about. francine: does that have to be

large? given the alliances that you have, do you think you will hit that target? richard: i think we will hit that target, yeah. that's what we are aiming for. it is more a question of scaling up, expanding as opposed to starting new debt. francine: has governments that have governments been in touch with you? who do talk with about distribution again if this goes ahead? richard: there are various ways of distributing the drug, and we are talking to a company who would be able to distribute this drug. ultimately it may need the might of a large pharmacy to be able to expand the distribution in multiple markets and negotiate with multiple governments. our focus today is to get on with everything that is going to make that possible. that is the analysis of the data, talking to agencies, making sure all of the scale of activities is being done so that we can produce a sufficient drug to meet demand later this year,

assuming everything goes well. francine: are you in talks with any big pharmas? richard: we have been talking to large pharma companies because of this program generally. we are in the middle of a trial with copd, a kind of emphysema, when the coronavirus broke onto the scene in january, but we've got a good dialogue. it's my job to have a good verygue, and they are interested in what we are doing. francine: all of them, or is there one in particular that you see working with more in partnership in the future? richard: there is a cluster of them. they have to be big, they have to be global, and generally in infection or biologics. there are plenty of them. francine: richard, thank you so much. richard marsden, the chief

executive of synairgen. is the worst over for ubs? the bank has signaled a return to buybacks and dividends. we will bring you an interview with the chief executive officer, sergio ermotti. that is coming up next, and this is bloomberg. ♪

francine: this is "bloomberg surveillance." let's get straight to the bloomberg business flash. here's laura wright. laura: billionaire jack ma is taking his finance group public. he is seeking a valuation of national theft $200 billion, and thes already valued amongst -- the company could raise more

than saudi aramco's record hold of $29 billion. bayer has failed to overturn the first jury verdict that is roundup weed killer causes cancer, but he did get the $79 million award slashed by three quarters. that is not covered by the settlement, three quarters of u.s. claims. the goal is to get the verdict overturned. dots bank may need to cut at least 1000 jobs -- according to those monitoring the lender. the bank chief executive told bloomberg he is planning a significant staff cut. the lender is not commenting be on the guidance he gave last week. that is your bloomberg business flash. francine: the worst may be over for ubs. the bank has signaled a restart share buybacks and dividends payments in the next quarter, after the wealth management division recorded that reported -- we spoke with sergio ermotti,

the chief executive. sergio: 70% is the factor based on economic contractions in the with aw quarters, and recovery, although not to the same extent that we will see the 2021 and coming into 2022. the 30% is a single year recession, and this is the one we need to put into our model in order to have the prudence necessary. hours, theast 24 vaccine -- put a vaccine deliver an alpha for markets in the second half that the dislocation that we have seen in the first half, good the vaccine change the v narrative? the vaccine could give a better hope, in my point of view, for at least the near term, -- the midterm, not the

short-term. short-term maybe there is a rebound, but a lot is priced, but it would not be impactful in the next 12 months. whatnk the reality is that we'll experience after this crisis is that many companies will be able to make it and go through and be even stronger, or be well positioned for the future. the one we are already struggling before the crisis probably will have a hard time to recover. in is where you will see probably a second leg of economic consequences of the crisis being played out. we under assuming the level of default with the recovery? sergio: it is fair to say that markets remain quite complacent. i would say that there is not a lot of -- if you look at equity

markets, which were quite a good investment -- now if you look at ,preads, the spread coming in and therefore there is not a lot of room for many negative surprises going forward. manus: j.p.morgan says as far as credit markets are concerned, we market, hallucinogenic locked in a hallucinogen -- a hallucination of credit markets. does that surprise you? : one has to look at huge diversification and not avoiding concentration on any kind of asset class or underlying -- manus: you still think there is mileage and credit, though? sergio: in some areas maybe there are, but the name of the

game is diversification. i'm also taking a little bit of liquidity risk on a certain kind of investment and return of higher long-term returns. francine: that was the ubs chief executive, sergio ermotti, speaking with our own manus cranny. we will have more on the banks, we will look at dividends. this is what the markets are saying. the markets are focusing on what is going on in brussels, or at least the fact that the e.u. has clinched this stimulus deal. that seems to be binding the continent together. stocks are climbing on these stimulus measures. the dollar weakening. i don't do this very often, but i want to look at what silver is doing, rising for a third session. coming up, a man who knows about adding value. a orchestrated multibillion-dollar sale to ob mh. since then he has turned his hand to the world the shareholder activism. he joins us next. this is bloomberg. ♪

francine: economics, finance, politics. this is "bloomberg surveillance." i'm francine lacqua, here in london. been the poster child for growth, but steady earning growth and the ability to make money in the stay-at-home world has made the biggest tech names synonymous with quality and utility, too. scarlet fu goes in search of potential problems. scarlet: the biggest knock against big tech, their outside gains leave little room for misses. those piling may leave little room to flee. a lasting rotation into other sectors. removing some of the shine from the biggest tech names. for apple, the pandemic may delay the iphone 12 and leave the company unwilling to give a sales forecast for this court of amazon likely grew more than 25%, but it is also spending a lot. how much will it spend to keep its network ring smoothly and on covid-19 expenses? microsoft is benefiting from a

shift to the cloud but is it giving up revenue by allowing to defer payments on contracts. advertising budgets could disappear, cutting facebook and alphabet. alphabet tends to rely on small businesses, particularly in the hard-hit travel sector. when you've only gone up, it doesn't take a lock -- a lot to knock you down a peg. francine: that was scarlet fu looking at tech surges industry as earnings gets underway. let's talk about the world of shareholder activism. my next guest is the former chief executive of an italian company who now runs bloomberg capital. sector has been hit hard this year amidst the pandemic. joining us now is francesco chupp honey, founder of -- francisco chupp honey -- francisco trapani. i know you have targeted some banks. how does the pandemic change the industry groups where you see

value and the need for change? francisco. what i would say just to get have anis that we important position, and this goes in the directional that we -- itth the evolution of is the best way to rapidly get .he leadership worldwide it looks good for -- you .ant to ramp up your growth weare investing there, and are waiting for the closing of the operation that we think is going to turn very soon in the

next four to six weeks. we do have -- francine: are you seeing any luxuryf gradual pleasuri recovery this year? are things getting better slowly? francesco: well, after the first, there has been people who have lost 40% of 50% of their business. things will improve, but there is no way that we are going to see a v-shaped rebound. this is for many different reasons. the economy is in a very tough situation. so importanth is for luxury, is super down. so we are going to see a slow recovery. areink we can say that we going to see probably the

before 2022.19 not the important thing is that certain companies have a very high valuation. they have a value that is very similar to the one that they used to have before covid, and to be honest, we do have some short position on certain activity groups. francine: is the luxury group industry going to nara? are there too many luxury groups at the moment? what do you make a difference between the winter and the leisure group that will not survive, or that is a loser? francesco: the luxury groups that we have talked about, they are all exceptional companies, very strong, and they will continue to be leaders. the real thing is that independent brands, and here is

the question. huge and areare good investments. many other companies are much smaller, and these people are under pressure. so we may see -- my opinion is that bubbly next year, before next year, probably within the next -- my opinion is that probably next year, not before next year but within the next people haveink leads with pe in the range of 25 times in the last five years. now they are up 45, 50. and this is not understandable immediately because they are not on the verge of growth, but they will have to wait for some time. francine: does the movement to shopping online accelerate, or

does it actually change? if pandemic showed that we can buy a lot of things online. what does that mean -- the pandemic showed that we can buy a lot of things online. what does that mean? francesco: e-commerce that was playing an important role before is becoming extremely important, especially in certain countries. the importance is on luxury. we have to recognize that most of -- we are doing very little with digital before covid, so they are going to go up, and rapidly. but of course this is not something that will become super important. traction,ing a lot of and requires some time to be dominant.

ended my opinion, especially in luxury, -- and in my opinion, especially in luxury, we continue to have an important role. although this role, because of digital, they will have to restructure. reduce a probably certain number of stores and sizes of stores in certain areas. francine: thank you so much for joining us, francisco chupp on a. we will get you back at some time. bloomberg surveillance continues in the next hour. tom keene joins me out of new york, and later today we speak with the chairman and chief executive of coca-cola, ames quincy. this is bloomberg. ♪

francine: deal done. a 750eaders agree on billion dollar recovery package after four days of tense negotiations. ubs signals the peak of the crisis is behind it as the swiss bank considers reviving shareholder payouts. novartis trimmed its 2010 he sales forecast on pandemic disruption full the chief executive is cautiously optimistic about it covid vexing. good morning. this is bloomberg surveillance. -- on a covid vaccine. good morning. this is bloomberg surveillance. we have a european deal. it took a long time but it seems every side got what they wanted and they managed to bridge the divide between north and south and also east and west in terms of the rule of law. it was a very european deal. it took ages but they got there in the end, and every got a -- everybody got a bit of something. tom: i