How that is digested. We will carry on the conversation talking about the virus. Trying to get an understanding of what is going on in terms of the case count. We are going to be digesting all of this. A Columbia University professor will join us to give us her take on what is happening. The Planet Fitness story is part and parcel of this, the closing of bars, and the fact we did not see the big blm protests picking up the count. We will be talking about that later on in the hour period alix . Alix a great headline. Bars versus beaches and how we open up. That is an Investment Strategy . Ward, joined by karen chief market strategist. Karen, we have noticed the uptake in certain states in the u. S. While europe has been opening atively successfully think you start with the macro story. Hass true that europe overcome the virus, partly because they met some of the were aons, which sustainable reopening. The virus was already down to sustainable levels, and good track and tracing. Those were in place prior to reopening. That wasnt the case in the u. S. There are still going to be clusters of problems in europe, but i think they will be managed on a more regional basis, therefore, the process of reopening can proceed. The macro is looking better. There are some really important policy steps forward with regards to how preemptive the ecb is these days, as well as the e. U. Recovery fund, a good step forward in integration. The macro looks good, but when you transmit that the stocks, you have to remember there are key differences between the u. S. Market and the european market, which has accounted for a loss of european underperformance. There is a high rating in financials. For that outperformance to be sustained, you really have to see that global, synchronized recovery is coming through, and we are getting our Interest Rates to outperform. Guy ok. Lets distill that down. If you have first money to put to work right now, would you put it in the United States or europe . Inen i think i would put it the problem is with that choice is it is not just about the virus. We have some big political events coming as well and the second half of the year. Though im even macro, im more positive on europe on the political front. We have smoother sailing through the second half of the year, but the you come back to that sector story. If we are looking at a more defensive situation in the u. S. Because of the virus because of the politics, it may mean tech may outperform and that is a u. S. Story. That is really important to bear in mind, it is not just relative macro, relative politics, it is how the sectors lived the industries as well. Alix taking on equities for a second. Is there a story about investmentgrade credit in the u. S. Dollar . If it is if it is hard to cherry pick the indices, is there going to be a move out of the dollar here . Karen i think the feds backstop is and thatas committed will be the case. As far as the data continues to look very concerning on the virus from i think they will reiterate that message, and i think the backstops of the u. S. Ig market is solid from the fed. The dollar is an interesting one. We have had conversations about that internally. Recovery is the proceeding in the situation is relatively stable, europe is perhaps reopening slightly more successfully. Asia is also looking like it is reopening sustainably. That is an environment where i could see dollar weakness, tickser, if the bottom from that, you could have slight ies and that may lift the dollar. It is a little lackluster. Maybe we will see downward pressure on the dollar the second half of the year. Guy do you think we get the same kind of performance as we have seen in the Current Quarter for the next quarter, karen . What will be the driver if we are to see that . That, i think if we see it is basically great news. We probably discovered a full proof that same ready for mass redistribution. We are going to see, therefore, the reopening can continue, and really increase in its breath. All of those cyclical sectors that have been beaten up, they can catch up, and that would be what is required for the market to have another leg up. I think maybe the other ingredient i would need to see would be the central backs bank saying they are not taking away the punch ball, even as the recovery gains ground. As we have heard from the central banks, this discussion ,bout average inflation therefore, we have to make up from that period of low inflation with a period of high inflation. Those are the things we need to see to have another spectacular leg back up in the year end. Unfortunately, i dont see how things playing out. Alix you mentioned the politics. I wanted to know how you looked at politics in the u. S. . In terms of the options market, we are seeing bets on volatility. Vote onnt get a election day, how do you look at when you are an asset manager in europe looking at the different dynamics . Karen i think to be very humble what isi will say about going to happen, and therefore, how do you retraced around that outcome . Quite honestly, at the moment, we have this massive swing in the polls towards mr. Biden, but there is so much but so much can change between now and then. We dont know who the exact candidates are yet, but even without that, we dont know who the running mates are, or the policies are, or the virus backdrop will mean. We dont know how that will impact turnout, how people vote. There are so many uncertainties. This state is about monitoring all the information, making sure we are on top about how the risks are moving, but i think, also just recognizing that there had been a very large number of political events where the polls have gotten things completely wrong. If you went into these other went intots a few these political events if you went into these political events expecting a certain thing making sure you have strategies to cope with things and turning out in a way that you did not expect. Some people will try to position around this, and they will try to hedge their bets a little bit. Im fascinated is china. How do i positioned my portfolio in china if i think it will be trump or biden . If i sell china if it will be trump . How am im positioning in asia . China is outperforming and a lot of people will want a bit of that, but they will put the election on top of that. Ween from the candidates, are hearing tough talk on china. Im not sure if it would be right to say trump will be antichina and biden wont. In terms of what you do, well, you continue to focus on the structure will investment scenes in china that are going to persist, regardless of who is elected in november, and in my view is focusing still on the rising consumer, how the middle incomes are changing their preferences, what they are buying, and how that is shaping the consumer sector, how health care, education, and how the demographics in china are shifting and be the Investment Opportunities are coming from that . It is about those stories you have High Conviction of because of how the chinese economy is evolving. That way you focus on your attention to be honest, guide, that is the way we are looking at so much and investing right now, you know . None of your guests will sit here and say, this recovery will be v shaped organ w shaved because we dont know how they shaved vshaped or w because we dont know how this is going to turn out. Dip, you canmarket get into those scenes at more attractive pricing. You would be surprised how many guests come here and have very clear views of what is going to happen. Karen will stick with us and carry on the conversation about what is happening in the u. K. Karen ward will stay with us. Still ahead, we will be talking about with boeing with stocks up quite strongly. The faa clearing the airframe or to begin recertification tests on the 737 max. We will talk to an analyst who has a buy rating on the stock. That is coming up later on the show. This is bloomberg. Im guym london, johnson with alix steel in new york. This is a european close on bloomberg markets. We need to talk about the u. K. Because it is trying to spin its way out of trouble. Ok. We are having a little bit of a pause. Lets talk about what is happening in the u. K. Announcing record bond sales of 75 billion pounds between april and august. You get to 400 billion plus for the end of the year. Boris johnson wants to spend big on hospitals and schools. Jumpstart the economy. Karen ward from asset management. Should we reward the u. K. For spending aggressively . Karen for investors, when the government is going to spend what you are trying to work out is whether you think that spending is going to lead to gdp and fewer tax receipts, which will pay for the initial outlay. Debt that would not price in the hawks. Now, the markets behavior suggests that is whether spending would generate, that it would be good for growth, that it is feeling an infrastructure gap, and therefore, you know, it is not something to be concerned about. We have not seen that across the gilt market. I think theres probably a degree of relaxation and markets, so the bank of england will reduce rates. Because of their inflation mandate, they can use that as a reason to continue supporting the gilt market and absorbing some of the issuance. For now, it is nothing to be concerned about. Policymakers should never be too complacent about taking investors faith and goodwill faith or goodwill for granted. If there were signs that inflation was starting to pick up in the u. K. , and may be the bank of england would have to retreat from the role it has been playing, or there were signs that may be this money, the additional, fiscal spending, wasnt necessarily driving future growth, driving future tax receipts, then the market would start to question that. But at this stage, it seems to be getting the balance right. Thingis that a broader though . If we look at how countries are going to spend, there is a point now where Monetary Policy would love to hand over the fiscal policy. It is a long time coming. It seems as if currencies from countries that are spending more are going to be rewarded because the market is seeing possibility of a quicker economic recovery. U. K. Feel like an idiosyncratic story . Is there a rule of thumb of treasury comes out, if a financier comes out and says we are going to spend hard, is that something as an investor i want to reward . Karen if it is on infrastructure, i think, and we are trying to pull out these lung investment strategies, i is theyat we will hear want to drive the recovery. Iny need to play a role charging the recovery, but it needs to be guaranteeing future growth, and i think the key opportunity that governments will be looking to is how they drive that transition towards a zero carbon economy. That is where the Infrastructure Projects will be focused. And i think investors will reward that our it is focused spending and meeting a clear political ambition. Drive future productivity, future capacity to sustain growth. As long as it stays in that spendingof investment that will really drive growth, i would argue yes, but we need to keep an eye on that. Just the tax cuts, the broad stimulatingor it is the supplies by the spending, that is where i think the narrative could change. Ways, i feel like germany is way ahead of any other country on that. What country keeps that deeper curve . Eye onwe are keeping an this inflation data, alix. It is a question of at what spending clearly generating growth, clearly leading to a closing of output gaps, clearly leading to a little bit of inflationary . Ressure the possibility of ending zero rate is insight. Those are the parts of the equation we are looking for. How big is the fiscal response . , you know,the moment yes, we have seen some fairly sizable measures being taken in europe, but they are not big enough 80, i dont think, to overcome the size of the gap. They have to fill the hole. I dont think we are at the point where fiscal spending is that big we are really looking at this materially. I think we will get there. I think that will be a story next year, particularly if we see the next cycle is going to be saved by authorities working together. Alix karen, we will catch up with you. We didnt even get to brexit. Darn it. Karen ward, thanks a lot. This is bloomberg. It is time for the Bloomberg Business flash part im ritika group do. The u. S. Real estate market, contract signings to buy previously owned home sword a record 44 with the three months Mortgage Rates falling. Gilead sciences has put a price on its coronavirus drug remdesivir. The company will charge the u. S. Undeveloped countries more than 2200 for the typical fiveday course of treatment. In may, a trial found remdesivir speeded up recovery about four days in hospitalized patients. Another cell of a petrochemical business. The price is 5 billion. They call it the next step in focusing its portfolio. That is your Bloomberg Business flash. Guy . Here is what we are talking about. There is a lot of shaping put forth with b. P. Today and many of the chat rooms i was looking at. The stock is reacting relatively well, but what it seems to me is that bp is selling these assets to defend the dividend. There is a nice quote if you go to the bottom of the statement that bp put out that said proceeds from the sale would be bp for pb for general general corporate purposes. Wonder whether that is a longterm strategy . Alix that is a good point. You want to hold oil prices come back, but you can also make an argument this is something they would be moving towards anyway as they try to reinvent the company, and become more of an energyfriendly net neutral, admissionfriendly because they really needed to offload it. The same thing with job cuts. That was coming down a maybe that was speeded up . Guy i wonder if that will make the company more cyclical . The petrochemical business has upstream downstream arguments. I wonder if it will make the upstream a little more volatile . Bought a bunch of assets from them in 2005, and i think will and i think he will look to do that again. This is bloomberg. I got an oriole here. Eh. Common bird. Ooh look over here something much better. There it is. Peacock, included with xfinity x1. Remarkable. Fascinating. Very. It streams tons of your favorite shows and movies, plus the latest in sports news and. Huh run the newest streaming app has landed on xfinity x1. Now thats. Simple. Easy. Awesome. Xfinity x1 just got even better with peacock premium included at no additional cost. No strings attached. Just say peacock into your voice remote to start watching today. Guy we are nearly done in europe for the day. Considering what happened friday it looks like we have stabilized. We are still trying to analyze what this all means, whether or not it was just rebalancing story friday or whether there was something more, profittaking, potentially. The data out of the state is turning to be more positive on covid, certainly the data out of florida, and that seems to have revived the market. We are up. 6 in europe. In terms of the individual markets around europe, lets take a look at where we are. , and the the cac 40 dax in terms of performance. What we are getting is outperformance. What that tells you is the main markets are doing better, but are is the peripheral markets, youre getting a core periphery split. Remember, italy went into this virus first and now we are starting to get a focus on italy visavis the rise in bankruptcies we are seeing. You wonder whether that can be replicated elsewhere. The cac 40ax, and all doing relatively well. Well talk about bp and just a moment. You are also getting a big bounceback in wirecard. In terms of the sector breakdown , you are seeing a more risk on breakdown,ms of the and terms of what is doing better and worse. Food and beverage, that is nestle, these are the bond trike proxies that are selling off today. Cars, industrials, all doing much better. The Banking Sector up to. 46 . In terms of some the individual stocks, wirecard is bouncing back quite strongly today. This is ar that company that has filed for insolvency. The wirecard stock is up because it looks like stops will continue during the process. Carnival is flat. Back of theon the sale of 5 billion worth of assets to jim radcliffe. Remember, they sold around 9 billion worth of assets in 2005. Lets talk about what is happening in the aerospace sector. That is look at the market story. Lets look at what is happening in the aerospace sector. A big few days for bowing. The seventh for boeing. The 737 max getting closer to get into the air. Test flights could begin today. Aerospace Defense Equity Research specialist joining us on the line. How critical a moment is this for bowing in getting the 737 max back in the air . What is the lag time for a successful series of flights and getting back into service . Of the timeline between the certification flights and we saw the news on thursday, we viewed it as a positive because it has been quiet for bowing since for earnings in april. We view some progress as a big positive and clearly the market is saying that. We think there are three test flights, and the time in terms of certification is midseptember. What could happen is there could be more changes if there are additional requests. Obviously this an aircraft that flies around the world. The faa has, under pressure for not being more diligent in terms of the work it did surrounding the aircraft. Other regulators around the world are likely to be involved in this process. We have a european regulator, a canadian regulator, chinese regulator. How short will the gap be between the faa clearing the aircraft for reentry and the other regulators clearing the aircraft in their regions . Sheila two points on that. The first point is according to press reports europe and canada have required changes to the Flight Control system with the faa backing these changes. This is different from the mcat systems. All three regulatory agencies agreed to require these changes as a retrofit and allowed implementation to the aircraft returning to service. These changes are unrelated. These changes could be required by the time the 737 max remember there are three different models of the max. The 10 is slated to be certified at the end of 2021. That is in terms of how we are viewing the regulatory changes we have heard outside the mcat system, and now we estimate 45 deliveries this year and 360 deliveries in 2021. Part of why we have lower deliveries than what bowing then what boeing is saying. We are saying they will not delete deplete their inventory until 24. We think they will have a stacked approach with regulators being slower than the faa to respond. Alix that is a big distinction. How do you then factor into the outlook consumer preference, like if someone says i do not feel comfortable flying a 737 max regardless of the regulators, how do you factor that in . Sheila that is a great question. We have done a surprising amount of consumer surveys, both on the max, on covid. On the max, Consumer Sentiment has been neutral. I think with covid, folks are much more worried about getting on a plane,being being next to other passengers. That is at the forefront of Consumer Sentiment versus name recognition on the max. I do not view that as a problem. Guy what is going to happen in terms of longerterm story with the max and the a320 . Is there going to be great demand for narrow bodies . You talk about a lower build rate as a result of what will be the regulatory friction. Does the current environment favor narrow bodies over wide bodies and you think we are going to see these build rates going back up again, not quickly but relatively quickly once we see domestic flights coming back online . Sheila another great question. What we are tracking in our report, which is up a data piece that tracks every flight globally, we are seeing a mix of 60 narrowbody aircraft flying right now. That is mostly domestic flight and 40 widebody. The seats on wide bodies normally dominate 60 of flights. It is a complete inverse we are seeing. We are seeing domestic traffic come back faster and you are seeing that in china, where domestic traffic is 10 below normalized levels, whereas international is still 90 below normalized. We do think we will see an increase in Domestic Versus International and the next one to two years, and that is something we are keeping in mind in terms of our forecast. That is why we hit our widebody Production Forecast much harsher than we hit our narrowbody forecast. There 27,000 Global Passenger aircraft in the world. 21,000 our narrowbody. The remaining 6000 in change is widebody. Guy alix what does all of that mean for the suppliers . The narrative nine months ago was if boeing keeps getting hit, suppliers have some kind of say over how much they get paid for their stuff, versus the dual monopoly of airbus and boeing. Where are we in that conversation with your predictions . Sheila i think the suppliers are in a tough spot because they are also impacted by covid. Lower production rates means lower production for them than trying to sustain their profitability levels. I think in terms of suppliers, what we look to next is what happens on next gen aircraft in terms of the next body that is built. I know that has been a discussion around market share of boeing and airbus. That is when you have to look at the engine suppliers rollsroyce, ge, united technologies. That is why one of our top picks in the space is raytheon technologies, which is the gtf engine that powers the a320. We think that engine will be a big contender on the next aircraft. In terms of suppliers right now, they are huddled up trying to maintain profitability levels, and in terms of Pricing Power with boeing, it is pretty limited. Guy boeing is trading 180 right now. What is the upside on recertification . Sheila i think you could look at boeing two ways. One is the glassful in one is the glass empty. It is a quick spiral upward down either way. You see the 737 max certified, and all of a sudden you have this liquidity and inventory drain completely unwind for the company, and have a reset of expectations. I think that could be viewed as a positive and a partial reason we maintain our buy rating on the company is he could have these catalysts unwind positively in the mark boal on the stock and the multiple on the stock rerate higher. The other side is a doom and gloom higher, nobody ever gets on a plane, and these things will be sold for free. Alix great to get your perspective. Thank you so much. We want to give an update on was making headlines outside the business world. Here is ritika gupta with your first word news. Ritika a divided Supreme Court has struck down a louisiana law that imposed limits on doctors who perform abortions. Justices defined expectations by reinforcing reproductive rights. Chief Justice John Roberts provided the crucial vote. He joins the courts liberal justices in the 54 majority. The Supreme Court turned away illegal attack on president trumps border wall. The justices rejected an appeal that questioned a law that led to weigh 40ration federal statute to start construction. The request was made by environmental who said it was a violation of the constitution. President trump is rejecting a report russia paid bounties for american and allied troops to be killed in afghanistan. The president says u. S. Intelligence agencies do not believe the administrative the information was credible and not brief them on. The white house denied reports the president had been briefed did nothing to respond to russian balconies russian bounties. Coming up on wednesday we will talk to john bolton about his 8 30 a. M. Ll book at new york time on bloomberg surveillance. 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 am ritika gupta. This is bloomberg. Guy . Lets check the final numbers for the ftse 100. For the ftse, the cac 40 come in the dax, decent day. Could have been worse. The peripheral markets underperform, but the ftse up. Why are card has a solid day. Up. 7 . 40 wirecard has a solid day. We will carry on with the cable show. Jonathan ferro in new york. I will be joining him in london. That is coming up. This is bloomberg. Alix live from new york, i am alix steel with guy johnson in london. This is the european close on bloomberg markets. Death from the virus have surpassed 500,000 worldwide. Broadway in new york shut until 2021 and maybe not opening restaurants indoors in new york city. Night guys spoke with a Johns Hopkins university istant professor about the block down. Cause quarantine fatigue. People all turned 21 the same and it is a result alix joining us now is an Infectious Disease specialist, Columbia University professor of epidemiology and medicine. Thank you for joining. As we reopen in the u. S. And as europe has already reopened, do we know what the best practices are when we have flareups . Thank you for the opportunity to speak with you today. We are learning this is a new epidemic, and we are learning how to tackle this epidemic both in terms of how to control it as well as how to start after putting in place strong mitigation measures. I would say we are in the process of learning. I do not think anyone has gone through this before and i think what is important is we take careful steps forward using the data we have at our fingertips and we are also cognizant we nee need to take a step backward we made it to take a step backward based on what happens after taking the steps forward. Guy what is becoming increasingly clear is that outside is safer than inside. Beaches are safer than bars. How long term does society adapt to the fact that this virus seems to transmit itself much more quickly in an indoor environment. What changes do we need to make . We cannot spend all of our time outside. Dr. Elsadr it is unrealistic to imagine people will spend all of their time outside. I think what we have to do is as we are easing the restrictions moving forward is we need to keep, to hold onto some of the measures that are very important. For example measures like wearing face masks is very important. Its equally important is more important inside than it is outside. Nonetheless it is very important in both of those settings. If you think about an indoor environment, especially if there is no good ventilation, it becomes very critical to be cognizant of always wearing a face mask and also the distancing is very important. We need to adjust our behaviors to the situation in which we find ourselves, whether it be indoors or outdoors and also how crowded is the context indoors, and so on. Alix what is the most effective way of doing that . Guy and i were talking about the case of sweden the left its economy open. Consumer confidence did not see a boost on the way up, versus denmark, that did. Individuals orom does it have to come from businesses . In reality, in order to tackle the epidemic, everybody has to be on the same page. That means that the national level, the government needs businesses as well as the citizens themselves. What we need is a social contract across all of these different entities as to what we are doing and why we are doing it, and then trying as much as possible to adhere to those parameters. But i thinkbe easy, it will be counterproductive if we have one voice saying to do this and another voice saying to do that. End wenally think in the do not need to sacrifice Economic Health for public health. I think we need to come to a consensus as to how we can open the society so we can take care of people going to work and stimulate the economy, but at the same time keeping in mind we must keep in place some of the very basic fundamentals of behavior that will protect us as we are going back into the economy. Early now the situation im trying to understand the data. It is clear the case counts are rising and hospitalizations are going to rise as well. Nevertheless, it seems that a younger demographic is now getting the virus. Their survivability will be higher and hospitals are Getting Better at treating. We do not have a vaccine yet, but we are Getting Better at dealing with covid19 once people get it. How does that change the way we react now to the way reacted to the way we reacted in march . Dr. Elsadr where we are now is a very different place from where we were in february and march, when we did not know much about the virus itself, not very much about how it was transmitted, we did not know how to control it. We also did not know how to treat people who acquire this virus. Based on what we know now, i think we need to have a measured approach. That means we need to minimize the spread of the virus. While it is true we are seeing a high proportion of new infections in younger populations, at the same time it is these younger populations that will transmit to older individuals within those same communities. We are in it altogether. You cannot celebrate it is good news that only younger people are getting it. Inevitably they will mix with the older population. What we need to do is make sure everybody, whether they are young or old, is working together so we can minimize the chains of transmission, and we know the simple fact is it is a virus that spreads from the respiratory tract. It requires people to wear masks , not only that they protect others, but they also protect themselves, and is much as possible keep their physical distancing. Us,s incumbent on all of businesses have an enormous role to play to create a safe environment for their workers as well as the workers themselves to do their part and adhere to those restrictions so we can create a safe working environment. The who is saying something very similar. Dr. Elsadr thank you. Guy we will leave it there. The who definitely saying something similar. Saying the worst is yet to come. Bloomberg. Alix it might be a short week with just four trading days, but a busy event calendar. After today banks will layout their capital plants in the u. S. Tomorrow in Angela Merkel and Emmanuel Macron meeting, and thursday u. S. Jobs numbers. I think manufacturing data on wednesday will be critical as well. Keep that. You know what im looking for . I am looking to see how me more companies bail on facebook throughout this week. Itll be fascinating to keep a running total. It depends on what Mark Zuckerberg has to say for himself. I appreciate analysts are concerned longterm, but in the shortterm term it does not look good. Alix no, it does not. Particularly when youre looking at Facebook Stock under pressure , very different from a we have seen other revolts against stocks and their political stance. That wraps it up on this monday. Happy monday, everybody. Coming up next, on balance of power, david westin. On wednesday john bolton about his new tellall book at 8 30 a. M. New york time. Do not miss that. This is bloomberg. David from new york to our tv and radio audiences worldwide, welcome to balance of power where the world of politics meets a world of business. We start with the markets again. It has been an odd day. Abigail doolittle is here. Abigail it is a strange day. Stocks solidly higher. The nasdaq is lagging a little bit on the day, but do your point on the idea that it felt as though it was going to be risk off, we had that selloff last week, we had a down week last week. Out of the last four weeks, two of them have been down. This is the virus data has been worsening. It felt last week there was a connection. Some of this may have to do with the fact we are coming up to the end of the quarter. With the s p 500 we are looking at the best quarter since 1998, the nasdaq the best quarter since 2001. You may be in a situation where managers want to lock this one in. This comes after the worst quarter in quite some time. Cruise control until the end of