On a friday in june, this is a huge deal. For me, the headline of the week was qantas in australia delaying International Flights into october. Madame lagarde is on that calendar. Im sure what she is saying come and much of what we saw in the United Kingdom yesterday, is lets get to it and keep the fiscal stimulus pressure going. None of these people are standing aside and relaxing. They clearly seems to be the message. Francine 100 . If you look at the shift of a lot of the language of the Central Banks, they see the range of forecast tilting slightly to the downward compared to where they were months ago. We will have plenty more on the markets. Lets get to first word news in new york city with ritika gupta. Upika china plans to speed purchases of u. S. Farm products to comply with the trade deal. Beijing will buy everything from soybeans to corn and ethanol. Purchases fell behind because of disruption caused by the coronavirus, and the countries have been sparring over the origins of the disease. Human rights and hong kong. Secretary of state pompeo is denouncing former National Security advisor john bolton as a traitor who has damaged america. Pompeo says he has not read his tellall book that was sharply critical of President Trump but he says from the excerpts he has seen published, bolton is spinning lies and halftruths. 800 40 billion germany and france want to deal wrapped up next month. The e. U. Plan would be financed by joint debt issuance, seen as a significant step toward economic integration, and that is one of the sticking points. Not every country wants taxpayers on the hook for spending by other countries. Senator Amy Klobuchar has taken herself out of the race to be joe bidens running mate. Biden should joe select a woman of color. Her record as a prosecutor in minneapolis has stirred controversy. Global news 24 hours a day, on air and at quicktake by bloomberg, powered by more than 2700 journalists and analysts in im than 120 countries, ritika gupta. This is bloomberg. Francine . Tom . Tom thanks so much. Equities, bonds, currencies, commodities. No question about it, it is a turn to the market, but right now will be a little bit of an up feel. We are not at 30, not at 29, but we are at 31. 80, the vix not that bad this morning. 75 move. Oil, im sure you have noted, oil with a new bid. Tom i actually francine i actually put oil in my data check, tom. Im looking at global stocks rising come investors cheered by the latest breakthrough in negotiations between america and china, also stimulus talks in europe. Sectionsignoring the of covid19. The other thing i am watching out for today is the quarterly event known as quadruple witching, which usually complies with rebounding of major industries, so watch out for that, for any extra volatility because of that. Christine lagarde warning minutes ago that e. U. Leaders of if there is no deal. Joining us is kit juckes. Great to have you on the program. Christine lagarde is not mincing her words. Market risks, which seems pretty obvious if the deal does not go through, will the e. U. Be able to convince countries to sign up to it . Kit i hope so. I mean, now is not that time for we have not learned that from the pandemic, we have not learned anything. That is the bigger picture, which is fiscal policy needs to get itself together. What we more desperately need is big fiscal moves, but we not that we will not get big ones without joint ones. For the euro, it is as simple as we have moved into this higher range since the data got better and since we started coming out of lockdown in europe. Back if people cannot get their act together. There is a lot riding on this, much more for the european economy. Francine what makes you worry about this package . Is it how i mean, do you worry about even if it goes through, if the funds are wasted in certain countries instead of being put to good use . Kit i worry that it gets too watered down. I was driving home from work last night, listening to phil about her sing to phil about her being essentially well about her be essentially rude about it on your station. It takes a long time to get over the line. But i think it is really important in terms of the signal it sends, that we are taking this seriously. In that sense, even if it is not huge, needs to be the third step toward engaging fiscal policy. Im worried that im worried iy because i think really want them to get this right. Good morning from new york. An imf chart of United Kingdom debt to gdp. And of course it is breaching 100 now, taking us back to the likeof 1963, nothing world war ii, but certainly there is a moonshot in terms of global debt. What is it mean, what does it signal . Kit i think it is a good thing that we fought this with that. The next crisis in 10 years of the last, that makes it a bit harder, but the jump in debt from the two months of increasing in debt debt in spending, we are running a sense. In that that is terrible math to do it that way. It is a big number but it is ok if we get growth coming out of the other side. To me as a markets guy, i look at that and say thank goodness we can qe. Companiesness major have the central bank. But spreading the pain over this for many years by buying the bonds. If you are south africa, brazil, an emerging market economy depended on foreign capital, you dont have that luxury. The fed is going to have to get paid, but thank goodness we have the ability to spread this over a long time at low rates. Go below zero because that would exclude it. Immune fromrencies movement in this debt big in this debt pick up . Sterling is within 10 of its real alltime low back in 1976, what we called i am a fourth imf on the phone. Sterling isnt going to go up while we have got this. But again, what i think is helping sterling in that regard to help dealing qe with this debt. Everybody in the developed economies have similar problems. In real terms we have one of the weaker currencies of those and we have slightly higher yield than others. But if we get a second wave of the virus, we could get an lshaped Economic Cycle in the developed economies instead of a v or some way have fleet between, then i think sterling will be some way halfway between, then i think sterling will be vulnerable. Tom kit juckes of society jenna round with us this morning. Row with use jenna this money. We get ready for the end of june and the end of the second quarter. No way to do that and within a short market, then Anthony Crescenzi of pimco. Stay with us, from london and new york, this is bloomberg. Tom bloomberg surveillance from london, from new york. It is a most interesting friday. Let markets remarkably quiet, but a lot of jockeying going on in the fiscal space. Francine mentioning comments like Christine Lagarde saying keep it going, europe come on fiscal stimulus. We will see where that leads. Kit juckes with us from societe gnerale. How doro, and dollar i play that for profit and not lose money by the end of the year . Kit you stick with the yen as something you want to own most of the time because it does not weaken much and it is still the best to have for return of significant risk aversion. For now, the dollar is only really going to turn lower when we come through and get light at the end of the tunnel. Why all these countries have massive leads for dollars around the world, even though the fed is prominent, that keeps it propped up to some degree. That makes it more difficult, so emergingmarket currencies are weak every time they are, and it props up the dollar. The euro, frankly, if we cannot hold here right now with these talks about this deal, we could to 1. 10 inn at 1. 08 a flash. If they get this deal to the next level where they can consolidate, i might feel a little bit more optimistic about things. Right now i am not, i am i might buy the swiss franc but not the euro. Not thebuy the yen, but dollar. In the shortterm, we will see eurodollar move general with i went to wake up where everything is red and the euro will have a hard day and the dollar will have a good day. That is not changing it a big hurry. Francine i know you mentioned some of the havens there, yen and swiss franc. How do you see swiss franc developing . Kit swiss franc is interesting because they will intervene if the euroswiss franc rate pulls back down to 1. 05. You will see them supporting their currency again, supporting the euro again. But until then they will let the currency strengthen. Unless the euro falls back down below 1. 10 against the dollar, the swiss franc looks like it is turning out. Had a good pandemic in terms of managing veryconomy back to life, a Expensive Hotel in switzerland sent me a nice message saying but i cannotn, afford to buy swiss francs with pounds anymore. It is a good, attractive economic story as well as being a traditional safe haven. The euro looks good against the dollar, and you will see the swiss franc gaining. Do with what do you pound . There are a number of factors in hand brexit, the boe possibly going to negative rates. Does that mean that is one of the most volatile but interesting currencies . Kit everybody is bearish, so it is never easy selling sterling as well as buying it. I think eurosterling, currently trading at about 1. 9, ought to. 95omewhere between. 9 and amidst the uncertainty. What i would do with sterling is not to own any, a bearish buyer in terms of how things go, but the thing that makes a big difference is what happens if we do get to start feeling that we are in for a vshaped recovery. I might turn around and think if they buy a vaccine, i might buy a pound. Because we have so much bad news priced in, we would come out i need a reason to fight the bearish consensus. Tom kit juckes, thank you so much, with socgen. Greatly appreciate the nuances there. Coming up, lord oneill will join us. Jim oneill from chatham house. His perspective on his United Kingdom, possibly his perspective on whether Manchester United possibly could beat the top. Stay with us. From new york, from london, this is bloomberg. Good morning. Francine welcome back. This is bloomberg surveillance. Britainss government barring 55 billion pounds in may, the highest single time of borrowing since september. Turning us is jim oneill. Thank you so much. We are not billion italian around, we are going straight to talking about the that we are not dillydallying around, we are going straight to talking about the deficit. Jim now is the time to figure out how we can get our infection same down further at the time as accelerating our way out of what i think might have been a horrific trough of Economic Activity a few weeks ago. The last thing we need to be thesing on too much is level of debt. Should we bewhat worrying about . Is it the level of job . Are we going to get more back to normal, or how will it change the economy that we know in the u. K. . Jim before the Treasury Select Committee two days ago, i was asked that question, and i will give you the same three answers i gave them. The first of which is particularly given one of the very, very few things the u. K. Got out of this mess so far, being able to hold its head up vaccines,he hopeful the u. K. Should do whatever it can, and if it requires no money, which i dont know if it does come it should commit more money to that because loosely the likelihood of a vaccine come as the previous guest touched on, if that were to be real, by september or october, then the last thing you would have to worry about is a vshaped recovery. That is the first thing, and it. Ould be so well spent thesecond thing is, despite realistic charges, the government needs to set out a clear framework as to when they will change the social distancing, and when they will get rid of the strange decision to quarantine people coming in weeks,e airport and two cetera, etc. , so that business path to some kind of the future. One of the issues right now is that people need the opportunity to open up again, but they hear it talk again about it going to tothe third thing that seems be controversial in some quarters, i think there is a case to be said for changing the bank of englands remits from from nominalgeting gdp targeting. It would not guarantee a vshaped recovery, but it would encourage the probability. Whylso sets a framework for the government might want to do with measures to reduce the deficit in the future. That might be my three things that should happen. Am would you prescribe nominal gdp targeting for all the major banks . Jim for the major Central Banks, tom . Tom yes. Jim yes is my answer. Just whenuld be you are switching on Christine Lagarde and the ecb i think it would be a fantastic thing for the ecb to do. That would they would probably be the hardest to persuade. In the spirit of never letting a crisis go to waste, one of the considerable challenges of the whole life of the eurozone is that we are just an inflation target with this just below 2 type thing with what the ecb does. Because germany will not accent inflation above two, it essentially constrains a lot of members italy being the classic 1 of not having any nominal gdp growth. It is not a permanent, sensible state of affairs. , in the, the eurozone spirit of not letting a crisis go to waste. Issome ways, tom, the u. S. Duee to it with the fed monday, of course. Tom these are incredibly important comments by lord oneill, and we will continue to discuss. Earlier this week, without question, the most heated conversation we had was with Kenneth Rogoff with the bricks falling down from the wall of the emerging markets. Lordll come back with oneill and speak on emerging markets, and the challenges that they face. They dont have the fiscal optionality of the wealthy companies of the wealthy countries. Jim oneill. Please stay with us. Worldwide, this is bloomberg. Good morning. I think there is a serious question related to the issue and that is, do we want to live in a world, to Central Banks want to live in a world where their interventions are so central to Market Outlook and performance . Important comments from nathan, his experience at the imf, part of our special tonight, this is an interesting crisis. 0, the year of look for that. It addresses what everyone is talking about. The moral hazard of this moment we are in. London and new york, jim oneill, we are thrilled, a storied career at goldman sachs, jim,hair at chatham house, i have to give the u. K. Credit because america cannot get its act together. We cannot get baseball figured out. We most certainly cannot get american football out. You get major major points for what we are witnessing, last few days, the crushing defeat of arsenal, but also today, i will get emotional, folks, Manchester United will lose. We look forward to that. Jim do you want to cut this interview short . [laughter] if what is the symbolism the u. K. Gets their premier League Without fans . Imagine some of your listeners wont like the next bit. Given the history, it wont just be manchester supporters are looking forward to tonight, because of the amazing history, george, bobby, you know, as a brand, that goes way beyond the 11 players on the pitch. Across the world, to distract minds away from remarkable challenges, it is just a fantastic thing, or at least i think that ahead of the game. If we lose, i will change my mind. Forward wheneileen Kenneth Rogoff speaks. He was scathing on this show about the vulnerability of the emerging markets, that they dont have the piggy bank to create the depth to save themselves and create demand. I certainly respect his judgment on so many things. My first reaction, i have always, in any crisis, the socalled emerging markets, others, the nature of the International Financial system, the u. S. Financial markets and despite the small relative decline in the u. S. In the Global Economy in the last 30 odd years, is not very rational. It is always such a challenge with socalled emerging markets. Discern individual blame because it is the system we have. Highlightsowever, it the contrast to 2008, the absence of True International coordination so far in this crisis is one of the most worrying aspects. In proposal for the imf april, because of the u. S. President s stance, it never happened. With that, we need to have a complete change in the relative order of these things that would allow for a more Equitable International monetary system. Until that happens, it is true many em countries will be vulnerable when there is a crisis. However, i assume, ken did not include china in that set of countries because notwithstanding the problems that have become apparent in beijing the past few days, all the very important philosophical issues surrounding china before and during this crisis, china seems to, along with other important asian countries, have dealt with this crisis so much better than europe and the americas and therefore, that part of the emerging world is not suffering at all, as a result, and in fact, it is getting lessons about how technology can be used for people. Ope can was not making it i hope ken was not making it across the board. It may be true for america and india, but for emerging markets in general, that is not a fact. Francine before you joined us, there was a warning of a market hit and moments ago, Angela Merkel told leaders the eu is facing difficult times. Do you think that aid packages are enough or do we need more, french, germany, and the commission . What if it does not code through go through . ,im what is heartening to me it looks to me, crucially, and i germans, right, the led by the chancellor have essentially made an important philosophical change to their stance on these matters. Moret to do much paneuropean fiscal policy and interventions, as an aside, looking at what germany has gone domestically as a response to this crisis is an exaggerated version i remember talking to you both about this for many years the german domestic fiscal policy response has been very interesting, and that in itself through normal channels should feed through to the economies of the rest of europe in time, given the importance of germany and europe. The crucial thing, germany, through Angela Merkel, appears to change their own view, is just a matter of wearing down the resistance of these other countries. Francine why did they change the view . In reaction to the cultural verdict on the ecb they thought they needed another form to make sure euro does not disintegrate . Jim i think that played a role. Back and if you stand look at repeated crises that have hit eurozone since formation, particularly 2008 onwards, the accumulating dilemmas, particularly that italy faced, and its important to the integrated project, eurozone and eu, some of the more savvy people, and here i suggest chancellor merkel at the forefront of them realized germany has to fundamentally change stance or otherwise it would be the end of the eurozone and possibly the eu. Francine thank you so much, jim oneill, chair of chatham house. Ritika looks like the trade deal between the u. S. And china is back on track. China plans to speed up purchases of u. S. Farm goods under phase one of the agreement, the Shopping List including soybeans to corn and ethanol. China fell behind due to disruptions caused by coronavirus. Growing numbers of coronavirus infections, florida, texas, arizona, california, reported oneday records and california will be required to wear masks in most situations outside the home, according to guidelines issued by the governor. Maske county rescinded the order after Top Health Officials received death threats. The Trump Administration goes to court to stop the publication of john boltons tellall book. The book is set to be released next week. Excerpts have already appeared in newspapers. The Justice Department argues the book contains classified info. Bolton says the government is trying to stifle free speech. 1963,e First Time Since British Government debt rose in may above 100 of gdp, reflecting a drop in Economic Outlook and one third in spending to come to the effect of coronavirus pandemic. U. K. Government borrowing increased by more than 124 billion in two months. Tax revenues plunged. Global news, 24 hours a day, on air and on quicktake from bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Tom thank you so much. It is a friday. We are resetting in the middle of june. Tony is scheduled to be with us and that will get us to july. We will have conditions on july 4, the boston pops, look for that. This is bloomberg. Ritika this is bloomberg surveillance. American airlines removed a passenger who refused to wear a Face Covering and banned him from taking flights in the future. As as described conservative activist. The largest Movie Theater chain in the u. S. Is planning speculation about financial trouble, earlier this month, Amc Entertainment warned it may not survive follow of coronavirus. The ceo says the financial peril has been exaggerated. Silicon valley data company raising 500 million from a japanese insurance company, set to be one of the last investments before shares start trading publicly. Board is led by a billionaire investor. Tom thanks. Up. Res dow futures up. 1 move on the dow. The vix comes in with a 31 handle, oil elevated. Francine looking at global stocks in general. Sharing the latest breakthrough in trade negotiations. That usually coincides with rebounds in the major indices which could spark some of the busiest trading days of the year. Eu Video Conference with leaders going on, we heard from Christine Lagarde, Angela Merkel of germany saying this package is needed for extra stimulus. This is bloomberg. Francine this is bloomberg surveillance, tom and francine from london and new york. Eu Video Conference going on with leaders, we heard 45 minutes ago from christine theree telling leaders would be market repercussions if they dont sign on the stimulus bill, Angela Merkel telling leaders they are facing a difficult time. Joining us to discuss, wolfgang munchau, first of all, what is the real risk of this not going through, of the stimulus plan not accepted by countries . Wolfgang it is always a risk. Budget a much bigger eu than there ever was. There are lots of components that would normally struggle for months, if not years. That, there is a even countries that have reservations and have launched alternative plans on lending, even they accept their will be compromised. Deal, thepect a austrians have indicated they would like tax concessions. Outs, would like opt because they have the highest per capita contributions to the eu budget. I think the dutch will be the hardest. Opposition is deeply rooted. There was a poll in the netherlands showing the heart of the government is widely , so thed by the country Prime Minister of the netherlands is likely to play a tough game. It will not happen today. In july. A summit the hope is to get this going. I am not sure. I think there is reasonable possibility they might and they are pushing hard and people are talking about negative market reactions, so the pressure is high. No one wants to be blamed. This is complex stuff. We are talking taxes, structural funds. If this gets voted in, support of member states, does it mean we will go through a phase of more integration of eu or will it be one step forward, two steps backward . Wolfgang i dont think it will. It is a good package. It is as far as they can go. Route,ve chosen a legal through treaties, a clause in the treaties, allowing the commission in an emergency to do what they did. This is not a euro bond. It is a oneoff. It says so in the law. If you wanted more integration from then on, you would need to change the treaty. Harder tot may become change the treaty once you have done this because people will say, we had the emergency, we ability tooved our act, like 2004, when they did the same thing. That frustrated future reform, when mario draghi bailed out, that ended the emergency but it also ended the fight for a more political integration. I expect that to happen now. This will happen. It will be substantial, this package, which is small. The eu is a 14 trillion heavy economy. Years. Lion over 4 [indiscernible] you are right to it. It is tentative. Oneofffits if it is and spread out over x years, is it to the benefit of the banks, the financial elites, the wealthy or is there a trickledown effect . Wolfgang they have yet to define how to spend the money. The problematic aspect is they have decided the countries. This is not a classic program. Spending priorities like environment. Billion, Something Like that, and the idea is to give it to companies for investment in infrastructure, hospitals, research and development, that kind of thing. Intended to be financial transactions. Well, themes off investment program, it should be the one the eu had in the last crisis but did not. Tom you mention the netherlands. As well, how do the netherlands fit into the major countries of the eu . Culturally and in the room of diplomacy . Wolfgang in the realm of diplomacy, they stand out. The dutch have a strong sense of humor. When dutch politicians, who are not trained in international diplomacy, make it to the top and unleash their humor on the world, people take offense. Culturally, what is different about the netherlands from other isntries, including germany, the project of integration is not primarily seen as a pragmatic contract but is seen as a moral thing, a moral imperative. The dutch believe in rules. They abhor rule breaking. Honesty. The dutchvery much, finance minister when he said, we should look why italy and spain have not left themselves enough fiscal policy to deal with this. Good tonot sufficiently explain what happened after the typical of but it is the way the ducks look at this. The dutch look at this. The moral view is widely shared by the dutch population. The Dutch Labour Party does not agree with that line but the vast majority do. Francine thank you for joining us. This is what markets are looking at. Comments from Angela Merkel and Christine Lagarde. Stocks rising on stimulus talks going on between eu leaders at the moment. Bonds pretty much study. Coming up, we speak with tony, Market Strategist at pimco. This is bloomberg. Save hundreds on your wireless bill without even leaving your house. Just keep your phone and switch to xfinity mobile. You can get it by ordering a free sim card online. Once you activate, youll only have to pay for the data you need starting at just 15 a month. There are no term contracts, no activation fees, and no credit check on the first two lines. Get a 50 prepaid card when you switch. Its the most reliable wireless network. And it could save you hundreds. Xfinity mobile. It is likeorning, the doldrums of august. Yield immovable, tony, and moments. Oklahoma where Trump Supporters come sweeping down the plain. The city wants health and Safety Measures from the white house, like, now. Today. In3, generals on a porch 1865, galveston, later that midjune where the people of all slavesformed are free. T is juneteenth thenlondon, much more open an new york
comparemela.com © 2020. All Rights Reserved.