Pension reform, which is controversial and france. Tomorrow is Super Saturday in england. Restaurants, hotels and hairdressers will finally good to reopen three and a half months after the start of the coronavirus lockdown. The Prime Minister is urging people to act responsibly and warning that the u. K. s not out of the woods yet. And in hong kong, police have charged a 24yearold man for inciting and committing terrorist acts, the first charges under the new National Security law there. He was accused of violating the National Security law as he drove his motorcycle, which had on it the slogan, reveille revolution in hong kong. Beening maxwell has charged with helping Jeffrey Epstein sexually abuse girls. The federal indictment comes after Jeffrey Epsteins arrest. Maxwell was his close associate for years, but she has long denied involvement in his sexual offenses. U. S. Prosecutors say she helped him identify and groom his victims. Her lawyer declined to comment on the charges. 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. Im leighann gerrans. This is bloomberg. Nejra thank you. Now a look at the markets. Global equities heading for their best week in a month, but european equities are edging into the red right now. The s p also posting slightly negative there. Nasdaq futures are unchanged. The gap at its highest on record. The nasdaq hitting records in its own right as well. So we are limping a little in equity markets on the last day of this week. The dollar is steady, but heading for its first weekly drop in a month. Oil heading for a weekly gain. Gold is fluctuating a little bit. Sebastien galy, a nordea Investment Funds senior macro strategist is joining us now. Even though we are looking weaker today on european equities, not getting a lot of direction from u. S. Futures, it has been a good week. How much more strength do you expect to see through the second half of the year . Quite a bit, but very much frontloaded. So, this is the face of recovery after a crisis. We are essentially in the last we are disconnected between hope and reality. You see that in the nasdaq. You see that in tesla. It is a powerful force. Beyond this, it is a much more complex environment. Gains in equities from 2021 will happen in 2020. Yields have been compressed. People will be looking for safe havens, to generate some degree of income with some degree of safety. And i think that it is great that we are in a recovery, but people should look beyond what will happen in two or three months, where things can get very complicated. Nejra what do you expect are inrs to do, if we the last phase of the post covid19 rally. Markets . Do they move money into other Asset Classes, or trade equities differently in terms of factor allocation or relative value trades, or going into the unloved regions . Sebastien you can see in the americans aret demanding european equities. Whichve to secondaries, is quite advanced. You should know in general what is moving up. Everything moves up. Volatility comes through the system, the bad stocks will stay on the floor, and the rest will have done quite well over two to four w eeks. The question is whether you want to be investing in value versus growth. Growth is a great place to be, wherever it relates to funds. The question is whether value is a safe place. Poorly. To do the question is what exactly is value . In reality it is complicated. Some are good in value, others have difficulty. What you will probably be looking for is people with flexible solutions, automated systems, switching for example from equities to doing currencies. So buying a lot of yen. The ability cases, to analyze stocks and shift risks across sectors. And assets do better in terms of their reservoir. And looking at infrastructure. So we recommend, or we savor equities,arket through climate funds. And we push that through to infrastructure, because we expect this transition to happen. Nejra you are favoring emerging markets, infrastructure and Growth Stocks. Let me ask about Growth Stocks in term of them make a cap. I was saying at the top of the show the nasdaq outperforming the s p 500 at a record, which means it has surpassed what happened during the. Com boom. Are you including the heavyweights in favor of those Growth Stocks . Sebastien of course. You want to be rational. You want a british debate. Want to participate. Capturingsome stocks a large part of the market. That could be like amazon. That is possible. But there is a large amount of Growth Stocks. And there is a future there not possible, because they will only of a small percentage growth. The underlying conditions will be there for them to perform. Once we have gone through the third tier, we know that we are in this beautiful world. And the good and bad are driven higher. Sure, i am not an equity analyst. But it is a good question to ask. Nejra you would be more cautious around the second and third tier of Growth Stocks. In terms of other Asset Classes, if you are looking at the portfolio overall, what other Asset Classes and regions would you favor as you see equity gains frontloaded . Sebastien credit is appealing, but managed credit. Summative figure out what is good and bad. So you can be on the financial side. Oit becomes down to the asset class, down to the country and actual stop, which stock, which is the bond actually held. And that means a possibility on the financial side, either in europe or the u. S. , where we work with partners. And there are opportunities in credit. Also in highyield. Once we passed the two month mark of euphoria and we get into more complicated situations, those come under significant pressure. You have to make the right choice in investments. If you are in high yield, with the right manager for example. You are staying with us. Tune into our boston pops fireworks spectacular camesa loot to our heroes, this saturday starting at 8 00 p. M. On bloomberg television, radio and bloomberg. Com. This is bloomberg. Added 5. S. Economy million jobs, shattering expectations. It is a spectacular number and has helped the situation enormously. This is a very strong employment report. 34 of the jobs coming back is a reasonable expectation, given what is happening on the ground with the progression of the virus. The numbers, which looked impressive, are stimulus driven. The data underscores how rapid things change in a covid economy. Even though we got a really important upside surprise today, it is way too early to declare a victory. Trump,that was president his Economic Advisor into some of our guests reacting to the u. S. Jobs report for june. Still with us is sebastien galy, a nordea Investment Funds senior macro strategist. It is backward looking, but how much heart did you take from the jobs data yesterday if you combine what we got from nonfarm payrolls and jobless claims . Sebastien one point we should make, that was pointed out by bloomberg, is the continued jobless claims these are difficult numbers. There are many issues with it. We do not know the quality of the data. But it is a clear signal. Werecular, people who temporarily unemployed are getting back into employment. The headline is looking solid. Whenhe excitement you get somebody has a car crash, comes out fine, nobody wounded, it is good. But it is still a car crash. Recovery is not instant. Apeare looking at the l sho in the case of the United States. And u shape. Many will find it hard to get back. Nejra wow. That is a very vivid image, the car crash. Youtrongly paints what expect to see. My question is, how much can stimulus actually heal that patient . The congressmen some would say, you need a fiscal package. Some would say the data is better than expected. This needs to happen very fast. People are depending on it. The economy depends on it. Cannot beat do not be lulled into complacency. You need to do it now. Expectdo you investors to favor the stimulus and recovery parts, in other parts of the world, to reallocate elsewhere away from the u. S. . And where . Sebastien there has been talk about investing in europe, which makes sense if you look at the potential in sweden and norway. If you look at germany, how well it has been handling the crisis. Theres a solid case to be made. But there our cases for each one of these countries. Nordic countries are looking appealing. It it attract investors from the u. S. Into europe, it will happen to some extent. But it is a global story led by china and the u. S. , and led by europe, so it is pulling everything together. Fundsuld have to take into europe and the emerging markets, but it would be marginal. Nejra we got a sobering report from the Congressional Budget Office on thursday, saying even a decade from now the jobless rate will still be above prepandemic levels. Will still not be above prepandemic levels. Thanks for being with us. It is Super Saturday, a big day pubs,eat britain as restaurants and other Services Finally reopened. This is bloomberg. Nejra this is bloomberg surveillance. Leighann lets get the Bloomberg Business flash. Something shares rose today to a new high. The stock has been propelled by a series of buybacks that have seen it recoup losses it suffered during the coronavirus crisis. The recovery is a vindication for the ceo. This after he unveiled plans to yen of assetsion to reduce debt. And citigroup is unlikely to bring more than 40 of workers back to the office until a Coronavirus Vaccine is available. The bank has a starting to bring a small percentage of staff back, but it has run into a consistent problem, the employees are hesitant to use as subways and buses to get to work. The firm has about 200,000 employees globally. And after six years in japan, uber is hitting the road in tokyo. Beginning today, it is partnering with three local operators to mix eccentric cars available. They will be mostly be run in the Business District in tokyo. That is your business flash. Nejra thanks. Cases in the u. S. Are surging, jumping the most in eight weeks as americans get ready for the july the fourth holiday weekend. In the u. K. , Boris Johnson is urging citizens to act responsibly as pubs begin to reopen. He says he will not fail to shut down the country again if cases surge. As we go into a big weekend for the u. S. And the u. K. , give us an update on the virus situation and at the second wave globally. Hi, good morning. Too early to call it a second wave. I think what we are seeing in the u. S. Is a continuation of her large wave of a rat outbreak that never really quelled by the u. S. Dr. Anthony found to, the head talked recently about how the u. S. Never really locked down to the same level that europe and other countries did during the original lockdowns. Most countries closed it down to inut 97 , for example, while the u. S. There was only 50 at maximum. That has made a difference in the ability to control the virus. Nejra yeah. Thatwe have learned today it is likely that arrivals from the u. S. Will not be exempt from quarantine in britain, what more have we learned about quarantine rules in the u. K. . John the quarantine rules in sure. K. , im not really about have been hearing there was a concern, another issue that dr. Tauci talked about, abou maytions in the virus that be a dominant strain that could spread more rapidly. And perhaps grow more quickly in and there is a growing concern. But it is not clear whether it causes more surveyor more severe disease yet, but this is something scientists are looking at right now. Nejra what we have heard from desk for secretary in the u. K. , he has talked about the government publishing a list of over 50 countries where people will be able to travel and come back to the u. K. And not have to quarantine for 14 days. European countries expected to be on that list. We understand that is to be effective from july 10. But on the u. K. Reopening, its Super Saturday. But we could be in lockdown again if it does not go according to plan. John that is a really important point. I think that probably what they will be doing is watching the reproduction rate number, and i rises this is the number that shows you how how people have been many more people are likely to it it, and if that rises think they will continue to look ,t the reopenings, and the pubs cinemas, and whether those measures need to be restricted again. Us,a thanks for joining john. Areing at the data, we seeing the stoxx 600 in europe extending losses. Global equities are heading for their best week in a month. U. S. Future slightly negative. Cash, stock and bond markets closed for independence day. Coming up, christian schulz, director of European Market research at citigroup will be joining us. That conversation is next. 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. [marching music] during bloomberg up for our annual forecast of the boston pops fireworks spectacular. We are carrying on the fourth of july tradition from the comfort of your own home this year starting at 8 00 p. M. New york time. Now lets get the first word news with leanne guerin. Areas across the u. S. Saw tightening rules, as virus cases continue to accelerate. Texas is making facemask compulsory, the reversal for governor greg abbott, who had move. Pposed the dr. Faucis warning that the virus may be mutating to matt it easier for the pathogens to spread. North Korean Leader kim jongun is urging officials to stay alert and keep up the fight coronavirus. He warned that complacency could lead to a unimaginable and irreversible crises. Kim hasthe warning, reaffirmed north koreas claim to not have a single case of covid19, widely doubted by Global Health officials. That china sanctions bill passed congress and now heads the President Trump for approval. The legislation would be imposing sanctions on chinese officials who crackdown on dissent in hong kong. Passess moved quickly to the legislation after beijing imposed a new National Security law in the city. Borish Prime Minister johnson says the u. S. Government has not approached his of administration to request an interview with Prince Andrew over his alleged ties to Jeffrey Epstein. During an interview on the radio today, johnson declined to comment on whether britain would comply if such a demand was made. Prosecutors in the u. S. Say Prince Andrew has refused to cooperate with investigators probing epsteins sex crimes. His lawyer says that is not true. Epsteins longtime friend, ghislaine maxwell, it was arrested on friday. Global news, 24 hours a day, on air and quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. I am the end guerin. This is bloomberg. Nejra. Much. Thank you so german lawmakers have ended a standoff of the europeans buying, votingnd to back the program seen as key to propping up the euro area battered economy. Rules of purchases could be legal, but the vote music the bundesbank can stay in the program. The citigroup economics director, christian schulz, joins us now. In terms of the monetary side from the ecb, how much more do you expect through 2021 . I spoke to eric nielsen of unicredit earlier. He says he expects bond buying come at negative rates, and yield curve control to continue ough 2025 hello, nara through 2025. Christian hello, nejra. We think there will be more bond buying. By december, we expect another big, multihundred billion bond bechase program to announced. That is simply a function of the issuance by governments, which continue to come. Which means that unless the ecb continues buying, there will be a negative impact on the financial positions, so they just have to beef it up a little more. Nejra how do you expect them to beef it up, a better question, what would get the best Market Reaction in terms of how it would beef up that bond buying . Christian we think crucial is the Government Bond buying. Reasons,cial for two one is, as already mentioned, the huge issuance. Governments are trying to absorb the losses of the private sector during the lockdown period. That means a lot of issuance. If the ecb does not buy it up, it crowds out the private sector as well, and you can buy as many Corporate Bonds as you want, and yields go up, that is one reason. The other is, the ecb has to control the spreads. It has to control the yield curves, not of the eurozone, but of every member state, and that requires Government Bond purchases. That is where the ecb gets the most bang for the back and that is what they bang for the buck, and that is what they have to focus on. Nejra if we focus more broadly theurope the recovery and fiscal response, you say in one of the outlooks that you often sense more optimism on the u. S. Outlook postcovid19, than for europes conversation with investors. You see that changing . You certainly challenge that view, dont you . Christian i do. If you look at any curve of the pandemic outbreak, it strikes you as surprising that anybody would be more confident on the an on theook th european outlook. Europe has brought the numbers of the first wave of the pandemic down across the continent. We are at numbers where you can control single outbreaks, and many of the strong outbreaks in local areas without huge image to the economy. The u. S. Never got to that stage and now they are already in a second wave, very difficult to control without another wave of lockdowns, which will increase economic damage. If you dont manage it, you undermine Consumer Confidence and undermine the recovery. On the monetary fund, yes, the fed brought down borrowing costs more than the ecb was able to. On the fiscal side, there is nothing between the u. S. And the response. Given the management of crisis has been better, i think europe has a better chance of getting out of this better than the u. S. , it depends whether or not there will be a second wave. Nejra right. One assumption often of the the rebuffness u. S. Consumer. Would you argue that there will be more rebuffness in consumers europe . Christian ex event questions. Normally, the u. S. Consumer is the consumer of last resort, but for everyone. But this crisis is a different crisis. We have had an investment cycle crisis and a financial crisis. This one is a consumer crisis, it is about human interchange that is undermined. That heads consumption more than anything else. It is unlikely the consumer will be the last resort here. If you undermine consumers confidence by not just imposing lockdowns, but also letting the virus spiral out of control, venue undermine the last resort further. Then you undermine the last resort further. If you look at the data, look at restaurant bookings, look at retail sales out this week them everywhere, europe, or at least germany, they look better than the u. S. So i am more confident on the Economic Outlook here than over there. Nejra you also talked about the u. S. Enjoying more of a monetary tailwind. How would you compare the fiscal responses between the u. S. And europe . Christian it is very easy to compare apples and pears. If you look at the raw numbers, the u. S. s actual fiscal response looks bigger than europe. The average european country has done half, at least in the first wave of the fiscal response, the grants to businesses, checks and these sorts of things. The u. S. Had double what europe had. But lets not forget, the u. S. Is creating automatic stabilizers that europe had in the first place, a much bigger welfare state, much more scheme. Employment that makes the fiscal response looks bigger. Europe has now moved on to the next wave of fiscal responses. We are now seeing conventional stimulus. We are seeing temporary vat cuts , cut to corporate taxes to bring Forward Business investment, cuts to energy costs , and the u. S. Is not there yet. Rightly so, because they have not opened up the economy yet we the multipliers for fiscal stimulus in the u. S. Would be quite small. Schulz staysian with us. Breaking news coming through from france. We just learned that emmanuel someoneas appointed else as Prime Minister. We heard that the previous Prime Minister resigned. That is the update. Then you Prime Minister is a mayor from that. Knees, given the role of overseeing from the pyre knees, given the role of overseeing the coronavirus lockdown. This is bloomberg. Oomberg. Bloomberg surveillance. , nejra this isbloomberg surveillance. , i am nejra cehic in london. I was talking with christian schulz, citigroup economic director. Before the break, we brought you breaking news regarding france appointing in youth Prime Minister. Appointing a new Prime Minister to succeed edouard philippe. Just a moment ago, we were talking about how you got quite a lot of faith in germanys response to the crisis, the recovery, and also the fiscal response generally. What is your outlook for france in terms of the recovery trajectory . Christian on friends, we are less optimistic. The Approval Ratings that macron has in the Approval Rating of him dealing with the crisis are much weaker, and it reflects back on to the Consumer Confidence. But if you look at it, not everything went bad in france. Theyve got the virus under control now, it seems. So far, so good. The Banking System in france has been very forthcoming with credit. It has provided liquidity and that has really helped french companies. The pmi this they are responding more strongly in france than they are in germany. What is important for macron is to build some momentum into the elections of 2022. He has good chances of being far, but he needs to answer the challenge not just from the right, but also from the center, the left, the green party in particular, so he needs momentum into 2022. Nejra the thing with france as well is that the government is looking at ways to extend crisis measures with a longterm furlough, also turning loan guarantees into partial equity. You have got a great note out about moving on to the next fiscal wave. We talk about second waves in terms of coronavirus cases, you talk about fiscal waves. Does that include the longing emergency measures . Is that a good step to take generally . Christian it is a good step, but it is still part of the first wave of fiscal packages. The first wave is really crucial this, thes like government moving in to absorb losses of that otherwise would sit on the shoulder of the private sector, to avoid debt. Ies with high some of it you just said they are doing, converting the guarantees into equity, that is exactly the right thing to do because it improves the Balance Sheet of companies, makes them invest again and allows them to recover from the crisis. But it is still part of the first wave. The second wave is, once we come out of lockdown, we will not fully recovered to where we were before the crisis. There will still be an output gap left, and we have to close that gap as quickly as possible to avoid scarring the economy, along the crisis to last longer than it needs to allowing the crisis to last longer than it needs to. That is classic conventional demand tax cuts and spending increases. We are not there yet on microns theme on macrons theme. Nejra looking forward to a stimulus package to be announced next week in the u. K. One thing that has been discussed in the u. K. Is the potential of vat cuts. Is that something that should be implemented globally . Christian yes. This crisis is interesting because households have been careful. To have had high incomes during the crisis but they could not spend the money. So they have more savings. The way to get out of this crisis is to unlock the treasure of savings built up involuntarily in the last few months. A temporary vat cut is a good way of doing that, so i think we will see more countries going down that route, and the u. K. Is one of them, we expect. Interesting. Christian schulz, great to have you on the show today. Thank you so much. Make sure to tune into our boston pops salute to our heroes, this saturday starting at 8 00 p. M. Here in new york, on bloomberg television, radio and bloomberg. Com. This is bloomberg. Nejra this is bloomberg surveillance. I am nejra cehic in london. Ray dalio scenes centralbank marketsmeans are no longer free. He spoke with bloombergs erik schatzker. Take a listen. Today, the economy and the markets are driven by Central Banks, and the coordination with the central government. What i mean by that is that the purchases right now of Financial Assets by the Federal Reserve or the purchases by the Federal Reserve of government securities are the drivers of but market of that market. So the production of market, if you look at money and if you look at who is in the market, the Federal Reserve, for example, will set an Interest Rate that for different types of creditors based on its economic objectives. In the old days, say when we had the 2000 eight financial crisis, we needed to protect banks because they were systemically important. Now, it is much broader than that. The whole economy is systemically important. If they did not go out and make companies, including what we call fallen angels, those that were just above investmentgrade and fell into investment grade, we would lose large parts of our economy. So we are in a situation right now where they are the market makers. Take the market out and take the Central Banks out and you have a different story, including the value of money. What is the value of money . Example,ut europe, for the central bank will lend to banks at 1 . That means you dont have interest payments, in fact, you have interest credits. The Central Banks will take that debt on, they will own it. They have a political agenda, not an economic agenda, in which they will determine whether they will be paid back, or when they want to be paid back, based on how the economy is doing and what will happen. In that case, like for example in europe and in similar situations in the u. S. And japan in varying degrees, they will make loans that have interest zero, you dont have to pay interest, and you may not have to pay principal back. It depends what the conditions are at the time. Those our markets which are driven by Central Banks, not only their actions, but their desire to be an owner of those and their priorities about that ownership when they buy and when they sell are not the same as the classic free market allocations. As a result, the Capital Markets are not free markets allocating resources in the traditional ways. Of the questions investors are wrestling with, ray, is how far Central Banks are willing to go in their effort to reflate Financial Assets to begin with, and, they hope, transmit something through the real economy that would result in growth and jobs. How far are Central Banks willing to go with this power may have discovered they have . Ray Central Banks are willing to go and need to go as far as it takes in order to keep the system of float, and because we are in the late stages where we have a lot of debt, you are going to see Central BanksBalance Sheets explode. They have to, because the choice is the sinking ship. Bridgwater was cocio and founder, ray dalio. Lets take a look at the markets. Stock and bond markets are closed today in the u. S. We are headed in the best week for Global Equities in a month, but flagging a little bit today when it comes to european equities, in the red for the first time this week. Not getting a huge amount of direction from u. S. Futures. Nasdaq futures are flat. The dollar is heading for its first weekly loss in about one month. Or the retreats, but heads for a weekly gain. Gold struggles for direction oil retreats, but heads for a weekly gain. Gold struggles for direction. A new Prime Minister for france, the mayor of the pyrenees. Bloomberg markets continues with anna edwards. The nasdaq closed at a record yesterday. She will be speaking with the w. H. O. Spokesman, coming up next, also dissecting the jobs data that was better than expected yesterday. This is bloomberg. European stocks turn lower, with u. S. Futures, as equities limped towards their best week in a month. That follows a betterthanexpected u. S. Jobs report. U. S. Markets are closed for the holiday. Coronavirus cases in the United States jumping the most since early may. Testing Centers Across the nation jammed as officials advise the safest thing to do is stay home for the holiday weekend. Shakeup in france. Prime minister edvard philippe resigns. A warm welcome to this special edition of bloomberg markets. Live from london, im anna edwards. European markets stumbling to