Welcome to bloomberg surveillance. Im Francine Lacqua in london. The markets are definitely focusing on a couple of things out there. ,here is a lot going in china global stocks continuing to it is yes and in the market. The dollar and treasury slipping. Homebuilder shares in the u k advance after a report the government is considering a temporary increase in the pay. Hold at which buyers weighing a Global Equity market that remains about 40 above its march lows amid this economic recovery, which is under threat from the continuing spread of the virus. We will have more on the markets but lets get to the bloomberg first word news. Here in london is leighann gerrans. Planning billions of pounds in two theaters and then use to rescue the arts and culture sector from the brink of collapse. Announcing the move, the chancellor tweeted the show must go on. He will outline his next steps for the economy on wednesday. The next key date for frexit progress according to one of europes biggest finance lobbies is september. That is when clearinghouses may need to start closing the positions of european firms. The association for Financial Markets in europe says three months may not even be enough for some of the larger clearinghouses. In israel, Prime MinisterBenjamin Netanyahu has declared a state of emergency. He says more steps need to be taken to stem the spread of coronavirus. The cabinet will now decide on new restrictions and present a plan to address the economic challenges of the pandemic. Netanyahu says parliament cannot behave like it is business as usual. Hascoronavirus pandemic permanently changed European Economic policy according to the bank of france governor. He cites the forging of a powerful joint fiscal plan for europe. He also says it has forced more extensive and exceptional Monetary Policy, which is likely to stay. 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. On leighann gerrans. This is bloomberg. Francine thank you so much. The weekend has brought more updates related to the pandemic. The who report a oneday high in global infections. Replaced russia as the country with the her thirdhighest number of cases. In the u. S. , new infections spread up to 2 versus an average of 1. 8 over the preceding week. Alberto, as always, thank you for coming on. The number of infections arising, yet economies are reopening and the market is ignoring it. How will it can out . Good morning, francine. We definitely have a disconnect between markets and the economy. However, one thing to note is the virus trend has been much. Etter in nonus economies in china and europe, the level of contagion has more or less stabilized and today, what we are seeing is a differentiation between u. S. Assets and nonus assets. We think generally speaking the virus has clearly differentiated governments that were simply find a problem versus governments that have been adopted a much more technical approach and we are going to see this in the growth data in the coming months, so europe and american markets are at an opportunity here because theyve been unlocked. Investors have been pouring they into u. S. Assets, but nonus economies have done better with regards to the virus overall, especially china and the Court European countries. Francine do you think we will see a correction or is the economy going to catch up with what we are seeing in markets . Abouto we are worried u. S. Assets and we think we think the u. S. Elections are no longer a done deal and we will see more support for the democrats, which will create some volatility. Policies are changing from Corporate Tax cuts and prowall street policies to promain street policies. What this means is for the first time, the recipients of aid are no longer going to be your only large companies, but we will have more universal basic income, we will have more s. Sidies to sme we will have more modern debtary theory, monetization in the extreme case. This will bring some inflation. The question is, what will Central Banks do . So far, they are anchoring yields so you have more negative Interest Rates against inflation, which means eventually, nonus assets will offer a better return and the dollar may have to weaken. We are positioned for upside outside of the u. S. At the moment and we are positioned to withstand volatility across u. S. Assets. Francine at the same time, we had a warning from Christine Lagarde. We will talk about possible deflationary pressures. Linkedin you make the call whether this will lead to inflation or will this be a global deflationary environment . We dont know exactly when the potential for inflation will begin. Currently in the shortterm, the pressures are deflationary. It is also true that policymakers reacted to the virus in a very nonlinear way, as a tipping point. Initially, they ignored it and then kicked in a very strong stimulus, which was a blanket stimulus in the range of five to 10 percent gdp supporting the economy. So the biggest question to ask yourself is as an investor, will the liquidity policymakers are injecting into the economy fill the gaps that have been created by the virus or will spending addictive with universal basic income in the coming years . Partially theis case. Some of this fiscal stimulus will not go away and Central Banks may become locked in to qe programs, for a long time. What a share in our view is that there is one thing that is not going to exist in the coming years, and that is a positive risk read of return. It means Central Banks will keep Interest Rates very low, even the longer part of the curve to yield curve control. Inflation probably will not be 5 , but will be 1. 5, 2 , 3 . Which is much higher than Government Bond yields, which will push investors to buy corporate debt. And equities that benefit from higher pricing power. Francine thank you so much. Alberto gallo from algerbris investments. The ecb president Christine Lagarde sees two years of downward pressure on prices in the eurozone before a recovery. More on that next. This is bloomberg. Francine live pictures of the louvre in paris, reopening its doors. The worlds most visited museum and home to the mona lisa, reopening today. With coronavirus restrictions, parts of the complex closed to visitors but it has been closed since march 13 and weve heard from the director over the weekend that they lost some 40 Million Euros in revenue. Things, getting back to normal in paris. The ecb president Christine Lagarde said the eurozone faces two years of downward pressure on prices, but could see a turnaround after that. Arde expects the crisis the president added the central bank will need to keep its Monetary Policy exceptionally loose. Inflation dynamics will be impacted with inflation to begin with and inflation that will occur, that we will have to anticipate, we will have to measure. They will most likely be based, if we have increased in productivity, on a natural increase in Interest Rates. The European Central bank and other banks launched ,nconventional instruments massive of securities so these were temporary instruments that they had lasted so the nonconventional instruments have become conventional instruments and there is a second change you have to consider. Policies. Al budget recovery will be european or will not be. Our response must deal with the emergency but be designed for the future. Take should allow us to revive our economys and at the same time, take a leap forward. We need to accelerate the transition, strengthen sovereignty while being open to the world and faithful to our values. Francine still with us, Alberto Gallo from algerbris investments. We were talking about deflationary pressure across the world. Europe, canat europe and the european economy reinvent themselves along the lines Christine Lagarde was saying . Billion, it is a game changer. It is an opportunity for europe under aforward to unite common fiscal policy. We see that as a game changer and many ministers are still underinvested in europe. European assets remain relatively unloved so if or ined, on the 18th august, it will signal a turning point and makes us more positive around european assets. Disinflation, i would say this is the main problem today and obviously the citing this inflation. The question is what will policymakers do if inflation moves higher to one or 1. 5 . For exploring policies would below. Training environment with very in Interest Rates, bunds negative territory, even having 1. 5 inflation is enormous for investors and that is why investors need to find other assets to capture the upside from the recovery and also from the coming together of european countries. Francine where do you find those assets in europe . There aree think clearly some winners from the virus but those are no longer interesting investment opportunities. A lot of Asset Managers and cios like to say i am invested in Investment Grade safe assets, investmentgrade credit. Those things are very expensive. They were only cheap for a week or two in march. You also have losers, which are sectors which were structurally already declining before the virus. Think about retail. Everyone is going to buy online in the coming decades anyway, so retailers were already. We like survivors, sectors that fromurvive, benefit government help, banks, industrial sectors. These are sectors that would benefit from a move towards state capitalist, which is a clear trend post virus. We are going to a state and sectorsconomy that can reduce cost and survive. Those are interesting opportunities across the world, particularly strong countries with the ammunition. Francine thank you for th joining us today. Alberto gallo of algerbris investments. I will speak to the former italian Prime Minister coming up shortly. This is bloomberg. Just francine this is bloomberg surveillance. Im Francine Lacqua in london. Virusvery from the pandemic may not come until 2022. Take a listen. Have been leaders proactively coming with a stimulus package that is to support the economy but i would like to highlight important elements. We should not lose the global challenges in the economy. Astock experience slowdown in 2019 and the pandemic has accelerated the slowdown in the Global Economy and created a shock to the astem, but we have seen positive response from the regulators and the g20 leaders, specifically the finance ministers and Central Banks, where they have learned from the previous crisis where they took their time to come up with a stimulus package but this time, the issue we need to look at certain elements of the Global Economy that enable us to look related toal changes digitization, related to our ability to have free trade and more importantly, should not lose sight of a key principle. Sustainability and also development, Human Capital developments. It is important we dont lose sight of them because normally through crisis, people forget about those longterm issues. Compliance, which is important. We have dedicated a special task force to address compliance. Can i ask you to put on your other half are a moment. Those are the global issues but you are running probably one of the most preeminent touch pieces of the Global Economy in sabic and you talked about the slowdown began before covid. Give the world a sense of what kind of recovery you are seeing in terms of demand and the shape of recovery that is coming across your desk. Let me start with positive remarks. People are really talking about a second or third wave of coronavirus. I think what we have seen, all governments have been able to lock down the system in order to unfold ands will give them the capacity to deal with the current crisis. I think the world recognizes they need to go back to normality and they have to build the resilience in the system and citizens to deal with such a pandemic. Therefore, despite the fact of any second or third wave, which people are talking about, is not going to push the economy to a complete lockdown based on our previous months experience. In terms of the outlook for the atnomy, we need to look positive recovery that is beyond to 2018. Lly reference that will be in the first four Second Quarter of 2022. We will have this year and next year a year of recovery. Wellpositioned to deal with these challenges. Side, from the business you suspended new capex earlier this year. Is that going to be enough or are you going to have to do more given what you are seeing . Think we need to look at this beyond just the capex. We as a company have a duty to make sure we have a very strong, reliable, safe assets to secure society and communities surrounding our assets. , top priorityl for us and then we go more to understanding how can we protect sabics Balance Sheets in addition to continuing having a clear support to our dividend policy and that also needs to be driven with our Growth Strategy to come up with how we manage our capital. Withire commies entire economies facing discipline, i can sure you sabic has a very strong Balance Sheet thellow us to cope with current market challenges and as you can see from our first half of this year, have announced first half dividends of 1. 5. That clearly shows how resilient ourcs Balance Sheet is and ability to cope with the current challenges. Francine that was the sabic chief executive speaking to bloomberg. We will also speak with the former italian Prime Minister enrico letta. We will speak about Foreign Affairs, ask him about europe and italy. Markets are focused on some positive news we saw with chinese markets. China, really proposing propelling the stocks rally to a onemonth high. 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. Francine economics, finance, politics. This is bloomberg surveillance. Im Francine Lacqua, here in london. Lets get to first word news with leighann gerrans. Dani a new high for leighann a new high for daily Coronavirus Infections around the world according to the world health organization. Mexico has overtaken france to become the fifth deadliest outbreak, and scientists have written an open letter warning of the dangers of the airborne spread of the virus. According to the guardian, these dangers are being underplayed by the w. H. O. The coronavirus continues to spread. Hopes are fitting for a socalled vshaped recovery. Many forecasts are pointing to a full recovery not happening until 2022. Goldman sachs has revised down estimates for u. S. Growth this quarter. That predict it will be back on track in september and still sees u. S. Gdp growing on the percent next year. Bill who is facing allegations of paying wages as low as 3. 5 pounds per hour. The sunday times featured an undercover journalist working at atactory at a factory a fashion factory. It says they are totally conditions are totally unacceptable and is a busy getting further. They say the factory is not a declared supplier. Fading out the use of huawei equipment in 5g networks. A network for the National Cybersecurity center concludes u. S. Sanctions will meanwhile way has to use on trusted technology. It says that will make security risks impossible to control. Global news 24 hours a day, on air and at bloomberg quicktake, powered by more than 2700 journalists and analysts in more im 120 countries, leighann gerrans. This is bloomberg. Francine . Francine lets focus on europes second economic recovery. Hospitals italys shock the world as the coronavirus took hold and what would be one of the worst outbreaks on the continent. With locked on measures eased, rebound was forecast in the Third Quarter as an overall drop in gdp of 11 . Rebuild for the future . Letta,joined by enrico former italian Prime Minister and dean of the paris school of international affairs. Thank you for joining us on bloomberg surveillance. Lets start with italy, and that i want to talk about Foreign Affairs in europe and the world. What is the prescription italy needs to get back on a stronger footing . Enrico the most important now the most important thing now is the decision about the esm. Reform of health care in the country, health in the , andry was really shocked it was attacked by this pandemic, and it was so difficult, and it is so difficult now, to relaunch it without european help. The main political issue now is a discussion about the use or think the esm, and i italy will take it. I hope the government will do it. The Italian Government gave a lot of money to citizens, entrepreneurs in the first period of the post pandemic, and next year the european money, the Recovery Fund will be there. Think the esm, i money will be very important. You think there is reluctance from the government to accept the esm . Is there still a stigma attached to the esm because of the greek crisis . Yes, it is exactly that, the point. Even if there are many positions that european authorities and even the esm leaders, they clarify that the present esm is different from the other one, and the other one that is not a fantastic role in greece, but at the same time i think there is on this point a crucial discussion among Political Parties in the country about how a new link with europe, a positive link made on trust and not on mistrust, and that is a key point because the country in the last years and in the last months became a very euro skeptic country. It is very important now to change this mode. This is why i hope government , and iercome obstacles hope the Prime Minister would try to take this challenge and to have the esm. That will be very important also to show italian citizens that europe this time is helping italy. That was not the perception in the last two crises. The other financial crisis 10 years ago when the italian citizens had the perception that europes approach was not prosolidarity. This time i think europe showed and is showing solidarity, and the german new approach is a positive one. The decision was positive. I think we have to go ahead. Francine is there a danger that are there conditions attached to anything from europe, that italians will say this is unfair . Is there a danger that europe attaches conditions that will be seen as austerity measures, and is that what italy would need now . Enrico this is exactly the problem with the public opinion, the idea to become the new greece of europe and to be treated as the greek were treated. That is the main point on the political agenda. But to say there is another leadershat populist country,usconi in the they think that having the possibility to continue their europe mention at to attack europe for everything, and to play the role of europe as that guy and continuing to attack europe is for them the best propaganda. So i think for them it is very take the esmnot because for them it will be important for the country and for them it will be exactly they will lose the main argument is badthat italy, europe with italy. So this is why i think the esm will be the Crucial Point in the next two days, and i repeat, i hope government will take it and use it as soon as possible, because the country needs resources. The country needs to have recovery, and the recovery can come with these kinds of resources immediately. I think that tourism can recover, but not as fast as we hope. A sense of me i think i was reading some poles and it goes exactly to what you are pointing to. Italians that do not understand europe or dont trust europe. What needs to happen over the next one to two years so that we dont fall into the hands of another breakup of the euro . I think forknow, italy there is no more room for mistakes at the european level. In the last 10 years, two big mistakes. The way in which the euro crisis was managed 10 years ago and the problems with italy, and maybe the most damage with public opinion, the way the refugee crisis was managed. Today i dont see any more room for mistakes. This is why i think what europe needs until now and the last. Onths is very positive what is very important is to continue and to be sure that this announcement will become reality. And the announcement of public plansn, euros, and europe are not just announcements for the media, but this announcement normalizedreality, people in the streets. Otherwise frustration will substitute the present trust because in the last months, i think there is a recovery of trust. March is a horrible month with the polls against europe raising in italy. I think now it is improving, but frustration is the big reason, if there is no application, implementation of all this positive announcement. Francine is the finance minister in italy doing a good job on some of the announcements with how to relieve companies and some of the plans he is putting in place . Enrico i think so. I think government, Prime Minister and minister of the economy are doing a very good italy. H in europe and in another big problem is the implementation, because as you know, we are waiting for next week, the european council. The big failure in the agreement at the european level with the blocking any agreement is another big risk. So i think that now it is very important for the European Union and european leaders not to make any mistakes. To have the agreement at the next european council, to implement what they are thisncing, and implementation needs to be very fast. Last time 10 years ago, the big problem was timing. The crisis started in 2008 with lehman brothers, but the first 2012, 4s arrived in years later. Can you imagine now to have the same crisis starting in march and responses in 2024 . It is not possible. ,e need responses very fast both at national and european level, but first of all at the european level. Plan, butecovery vonda layin, the Commission Plan did, i think it is a good did, i think lyon it is good. Buffett coming up, mr. Goes buying. Berkshire hathaway get its biggest acquisition in four years. More on that later this hour. Up next, we will talk about how the coronavirus reshapes trade. This is bloomberg. Francine this is bloomberg surveillance pickup will the Coronavirus Crisis reshape trade and International Relations . Services have some to their lowest level in more than a decade. European leaders talk about shortening supply chains and curbing reliance on china. Should 2020 prove a turning point or a bump in the road of continued publication. There with us, enrico letta. When you look at the severity of this crisis because we essentially suspended the economies for months and we could go back into a lockdown, is it an opportunity to reshape our economies, or will it revert back to what it was in 2019 when things get better . I think that this period and this period of crisis is creating a lot of problem for global trade. The main trades the main problems go to multilateralism. The problem that wto is facing. The problem was there even before the coronavirus. But now it is bigger and bigger. So i think the key point is how to avoid now as reaction to this pandemic protectionist it worldwide reaction. Becausea big risk consumers, companies, public leaders caners, and be tempted to push in this protectionist mode. I think that goods coming from growth are risky or Something Like that. I think there is a big risk for international trade. I think the biggest risk in the last 20 years. Wto. E need to relaunch now there is the search for a new secretarygeneral. In most important point is in agreement from leaders to continue and to continue relaunching the wto and not killing it. And at the same time i think the other key points related to the american trade policy in the future, and of course it is related to who will be the next american president , because i think there will be a crossroad at the next american elections, can be a push with the election of biden. With the election of trump, i think that is a different scenario where i fear, i am afraid that the multilateral trade system that we created some decades ago will be at the end. So it would be necessary to build something different, maybe on bilateral regional relationships, and that will have consequences in the relationship between europe and china. My very short point is that the reelection of trump will create the conditions for new links and more links between europe and china. Francine if you look at the u. S. Election, how can it change the relationship between the u. S. And china come and how will it change the relationship with europe in this new world . Enrico i think that there is a clear difference between what biden is saying and what trump is doing and saying. And it is clear also that coronavirus shows the fact that Transatlantic Community is no more there as the main actor because of what happened between france and europe. Because of what happened with brexit. Decisions were ,he worst moment in the period with consequences for the europe and the u. K. My point is that in the post Covid International affairs agenda, there is a big priority for all of us, to reshape the Transatlantic Community because firstrisis was also the nontransatlantic leadership crisis, and we need to consider a Transatlantic Community, transatlantic leadership is important. For us as europeans to have with u. K. And u. S. And positive relationships. It can be fundamental. So my point is that and i priority to reshape the Transatlantic Community, to have a transatlantic relationship with the future will be a point that will be the outcome of the election. Of course, that means biden because i dont think that trump will have a second term very different from the first term. His first term, the destruction of the old Transatlantic Community was one of the outcomes of what happened. Francine thank you so much for joining us today, mr. Enrico letta, former italian Prime Minister, now dean of the paris school of international affairs. Coming up Warren Buffetts deal, Berkshire Hathaway breaks silence with one of its biggest acquisitions in four years. That is coming up next, and this is bloomberg. Francine economics, finance, politics. This is bloomberg surveillance. Lets take a look at the key events to look out short to look out for this week on what exchequer chancellor rishi sunak will put out for the company for the country. Hosts theay, trump mexican president at the white house. This will be the mexican triprs first foreign since he took office. On friday, singapore hold an election. Lets focus on m a, and Berkshire Hathaway has broken its steel draft with its biggest acquisition in within four years. Warren buffett is landing on a betting on a bright future. Discussing this with his is dani burger. If it has been quiet during the pandemic. Finally we have a deal from him. Assets ofs buying the coveal gas, a 25 stake in point. Thate tag will be means that this is the biggest deal since about 2016, and really buffetts only deal for Berkshire Hathaway of this crisis. In his last shareholder conference, he has been pretty estimates that, did not see anything attractive. That is when he was ditching all the holdings of his airlines. So he is diving back and after much criticism considering he staked his reputation on being able to build complex deals during crises. So he is going in here, and a lot of commentators here are saying that this marks a positive sign for the market that buffett is willing to go in with a deal the size of this one. Francine there is other deal news today with uber postmates. Dani uber is purchasing postmates from within 2. 5 billion. Uber had tried to pursue other assets similar to postmates before, trying to buy grubhub, which ended up being purchased by takeaway. Com in europe. It is by no means number one with uber eats. That belongs to doordash. Postmates is a distant fourth place, so they are not going to surge, having the biggest market share with this deal, but it gives them bigger foothold in los angeles and the southwest of the united states, so certainly a valuable asset for them in those terms. Francine dani burger with all of the details, of all the deals happening on this monday. Bloomberg surveillance continues. In the next hour i will be joined by tom out of new york. Dont miss our conversation with saudi arabia session deck with saudi arabias central bank governor. That is a conversation with joyce chang. The markets are focusing of course on what is going on in general with china, and china is proposing global stock rallies to a mom a one month high. After stoking bullish enthusiasm for the domestic market. Im also looking at the dollar falling for a fifth day, and treasuries dipping. All that and much more coming on bloomberg. Francine global coronavirus cases reach a record. The rate of new infections in america speeds up to 2 . Goldman sachs now expects a wider contraction in the u. S. Economy this year. Stocks seem immune from bad news. European equities and u. S. Futures rally. The shanghai index rises more than 5 . And in europe, the bank of france governor says the countrys economy is picking up faster than expected. Christine lagarde sees disinflation ahead for the eurozone. Good morning, everyone. This is bloomberg surveillance. Francine lacqua and london, tom keene in new york. A lot of the focus is on stocks, a lot of the focus is on the rally, a lot of the focus is on the number of cases rising across the world with market is largely ignoring it for now. Newust to give you an idea idea,ust to give you an what changed on this monday as we stagger through july is there is no question the tone over the weekend