There would be governments to the rescue of fiscal underpinning to what is trying to be a recovery. You mentioned the important Goldman Sachs story, but clearly the markets are lifting here with a belief that governments will once more step in. Francine and there was a pretty incredible rally with shanghai stocks up 5 . Lets get to first word news in new york city with three. With ritika gupta. Ritika a coronavirus record. The seven day average of new cases reached another new high yesterday, and over the weekend florida and texas established daily records. The county the top county official in the houston area once more restrictions to contain the spread of the disease. The State Government has blocked her from doing more. Indiana has the thirdlargest number of coronavirus cases in has third india the Third Largest number of coronavirus cases in the world, surpassing russia. Theite implementing one of most expensive lucked out at the end of march. President trump sounds as though he is changing his position on masks. The president will hold a rally in New Hampshire and face coverings are strongly encouraged. Hasmonths the president expressed skepticism about the value of Wearing Masks to prevent the spread of coronavirus. U. K. Is injecting 2 billion into museums and music venues in an attempt to rescue the countrys arts and culture sector from the brink of collapse. The chancellor of the exchequer, rishi sunak, tweeted the show must go on, to prevent jobs from being lost. Global news 24 hours a day, on air and at bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries, i am ritika gupta. This is bloomberg. Francine . Tom . Tom thank you so much. Equities, bonds, currencies, commodities. It is a risk on field led by equities and futures up 35. The vix has not moved yet, but it is a nice 27 handle, and a 26 would be a more attractive mark, moving from 80 down to 40. Now breaching through 32. We have been grinding there, and then down we go in the last few days. 28, now a 27 handle on the vix. Brent crude getting near 44. We are not there yet but we are getting there. Francine im glad you brought that up. Im also looking at the shanghai composite index, the biggest advance since 2015, and that is stoking global markets. They are starting the week on a high, the dollar falling for it for day. European stocks gaining some 1. 2 . We will have plenty more on the markets and on the economy as a lot of economies are reopening. The louvre in paris, the museum that is the most visited in the world, opened its doors this morning after being in lockdown or after being closed since march 13. They lost 40 million in revenue. To talk about the markets, to talk about the economies, where joined by joyce chang, jp morgan chair head of global research. Thank you for joining us, especially when there is uncertainty about inflationary and deflationary pressures we will get. When you look at the outlook for economies, is it more positive or less positive than it was two or three months ago . Joyce it is definitely more positive over a one or two month you than it was a month ago. The labor and employment numbers are better, and we are seeing an a synchronized downturn with a partial vshaped cup. The three to six month rise in is more of what we are looking at. Belowll see gdp almost 4 where it was prepandemic at the end of the year. You still have this report coming online. The income support is still there. That will begin to rolloff in the Fourth Quarter of the year, but over the next one to two months, what fema is telling us, we are looking at a lot of highfrequency data, the numbers will remain particularly strong on this vshaped rebound, on the Consumer Spending side. I think you could still have a little more momentum here, but watch out for the Fourth Quarter. Youcine joyce, what do expect Consumer Sentiment to do . Until we get the animal spirits back, or the Consumer Sentiment back and firm, is there a risk that the economy wobbles . Joyce there is a risk that the economy wobbles. If you take a look at private labor income, that is that has contracted by a third. But with all these packages, taking care of 20 Percentage Points of that. I think there are going to be questions getting into the Fourth Quarter of the year. But you have an historic downturn. A Second Quarter that when down by 35 . So it is surprising that the thirdquarter numbers are much completeen you have a lockdown when you dont have a complete lockdown to a partial opening. These incomeome of supports are not going to last forever. We are looking at more risk as we go into the end of the year. Over the next one to two months, i think you could see this come down more from here. You could also see that there have been a few more surprises, as far as gdp growth numbers. China has been leading some of that. China has been almost close to a full recovery. Francine joyce tom joyce, good morning from new york. Im fascinated by what you and jp morgan think as mr. Buffett finally acts on 9. 7 billion large. To me it is simple money costs nothing. Everybody has to figure out what to do because there is not going to be Revenue Growth out there. Are we ready for a buffetinitiated revenue frenzy . Joyce youre absolutely right that money costs absolutely nothing. If we look at just the negative yield on Government Debt, youve ,ot about 32 trillion of debt a percentage of global Government Debt now that has less than a 50 basis point yield. Think thereng i is no indication insight that you were going to have to change the strategy over the nearterm. If anything, the market is looking at more fiscal stimulus, still coming online. In the emerging markets countries, more easing as well. Getting to equity markets. Whether you see a shift over n 8022 a more a 6040 ratio. Francine im fascinated maybefacing it by a a 32 alterable as well. Stocks are fully priced in many sectors. Ok, fine, yet we are all talking about m a activity because money costs nothing. Thedoes a cfo rationalize acquisition of a 28multiple pe . Joyce youre absolutely right that money costs nothing, so if you look at how corporates can raise debt on one hand it is over 6 in the highyield market, that is a 10 year high. But you have an alltime record issue in the u. S. Corporate bond markets, 1. 6 trillion. There have been downgrades. We have seen 11 of u. S. Corporate downgrade that since the beginning of the year. But you also have the companies are able to come to market and they are trying to plan ahead for the longerterm. I think that is what the market has been focused on, this period that they are trying to put a buffer into place right now. Francine go ahead. Joyce and tapping the markets. The fiscal deficit is something that should be talked about more. We are looking at a fiscal deficit coming up to about 13. 8 of gdp on average, when you look across developed countries. Francine when you look at some of the scarring left by the crisis, the economy, where do you think the fundamental scarring will be . Joyce i think unemployment still. We were at a 50 year low. The unemployment number is have surprise, but will you still see unemployment at doubledigit levels . That relates to labor, income, unemployment. You will also see more downgrades going to junk stats. We see about 300 billion of triple ddebt on a negative outlook. There are wonder term consequences over the next one to two months. The market is doing a couple of things. The second wave will be there, but you will not go back to the lockdowns that we had. They are assuming an accommodative stance, with more stimulus at least over the short term. You will have Fourth Quarter concerns about the election outlook and more concerns over whether they will have to extend income support or what happens when it does go off. Corporates see taking advantage of the markets at spreads that are close to alltime lows. Int is what you are seeing the equity markets, too. They are still positioning this relatively supportive 25th to 30that the percentile now. That is the one thing propelling the market. Much,ne thank you so joyce chang of jp morgan, who stays with us. Coming up later this hour, and exclusive conversation with Saudi Arabia Central Bank governor. That is coming up in the next halfhour. This is bloomberg. Tom good morning, everyone. Bloomberg surveillance. We start strong and this hour with joyce chang of jp morgan, driving all of their Research Coverage with a true global feel. Ive got to talk about hong kong right now. There have been so many changes. The articles over the weekend of a society having to adjust. How will jp morgan adjust in hong kong . Joyce co. I think the honk joyce i think the hong kong situation, the key question we are getting is whether the hong kong tag is at risk. We dont see any risk of that. Economic consequences, that is something that actually is quite manageable right now. It is the bigger u. S. China question that everybody is focused on. Here we see if you take a look at the congress right now, there is more than 300plus cases of thats pieces of legislation that deals with some aspect of u. S. China relations. Some of it is trade, some of it is tech, some of it is human rights, some of it is democracy. This is an issue that will remain in the headlines and will not go away anytime soon. You will see it remaining as we go into the u. S. Election calendar as well. Experience onour that long flight to singapore. With all of your years of managing the airline what is the ability to move a platform to singapore . What are the constraints . Joyce i think many firms have already been putting yield off, whether it is the macro hedge funds having representation there. At the way we work has also changed during this pandemic, so there is less travel going on right now. U. S. China, you continue to see expansion in financial services. We continue to see china going into the more mainstream indexes. You continue to see u. S. Banks expanding there. The reality is you can talk about deglobalization all they want, but chinas domestic market remains very attractive. You still have all of these Global Synergies that have to work with these issues. Some of it is going to be competition, some of it is going to be cooperation, but i dont see this deglobalization model playing out as quickly as some think, just given the linkages already in place. Francine joyce, longerterm, we heard from Christine Lagarde saying she is expecting two years or so of deflationary pressures in europe, then a pickup. Are we going to see deflationary pressures take hold across the world, or actually if it is more inward looking, does it mean that for inflation . Joyce i think you will see the deflationary treasures take hold over the short term because of the hit we are seeing in income and profits. These income supports cannot last forever. Were looking at a fiscal deficit going up 3. 5 Percentage Points, 13. 8 of gdp. Real concerns about where potential growth is going to end up after all of this. So i would not worry so much about the inflationary pressures right now. I would worry more about the job losses and what they are going to look like. I think the imf is absolutely right. Twoyears time, we could see were at forhat we the pandemic. Lot of people also say im talking about the imf, ecb expecting this to be an opportunity for a greener technology, for jobs to change. How much transformation will we see in jobs, especially in emerging markets . Isce i think that this something that europe is focused on. I am more skeptical that you will see that in other parts of the world. Europe was ahead of the curve both on regulation and on policy as well as on the policymakers seeing it, and it is more important for europe because europe is more digitized at the moment. I think in the u. S. You are seeing less appetite for refinancing. In emerging markets, they dont have anything against that issue right now. I think there is an opportunity. There will be much more of a look at what is sustainable after this crisis, and that means like in the esg, the s and the g components will get more focus. Im not so sure a Green Recovery will be seen globally. I think it is a very European Focus right now. Monday morning question, one final question if i could. We are up 40 off the bottom in march, depending on the measurement that you look at. Why should i own or buy a marginal new share of stocks this morning . Give us the core jp morgan view, the infinity as among the stock market. Joyce first, the vix will continue to go down, so is it something where you will go youer to 20 on the vix as go toward the year . Is your positioning still relatively attractive . Those are some of the more technical arguments. The biggest problem is what you euro in the bond market. Where are you going to see more upside, in the equity market or in the bond market . Whatever you are looking at, this is not a sixmonth cold call but it could be a one to two month call. You went down sharply in the Second Quarter. With uc data prints in may or june that are more supportive of the market will you see data prints in may or june that are more supportive of the market . Those are some of the more immediate things that will be the focus. I do think the Fourth Quarter will be trickier, probably different on policy with brexit and the u. S. Election. Tom certainly in the weekend reading, everyone focusing on that ship from q3 analysis to q4. Voice chang with jp morgan, thank you so much for joining us. We have a lot of good conversation to set your monday morning, on economic, finance, investment. Greg valliere to join us later on the folly of the washington beltway. In between, Catherine Mann will join us from citigroup. Stay with us. This is bloomberg. Ritika this is bloomberg surveillance. Lets get the Bloomberg Business flash. After awill leave decade at the british bank. He will stay on until next june. Void is the weakest orders lloyds is the biggest mortgage lender. He received fulltime ownership after the bailout during the financial crisis. Bloomberg has learned that the ridehailing service uber has agreed to by postmates for 2. 7 billion in an all stocks takeover. Of ubers is a rival eats. Billionaire Warren Buffett is making a bet on u. S. Liquefied natural gas. Toits berkshire has agreed base 4 billion for to me energy cap natural gas line gas pipeline storage. That includes a 25 princeton stake and the natural gas export facility. Contacts withrm india and japan. Contractsrm supply with india and japan. Francine this is the data we are looking at. China is propelling the global stock rally to a mom month high to a one month high. If you look at europe, bank instruction, shares are pushing the stoxx 600 up. U. K. Homebuilders are also rallying after a report that the government is considering a temporary increase in the threshold at which buyers pay. Up 33, no question about a. The vix comes in at 28. You heard joyce chang talk about a vix that migrates lower. The assumption there, better stock market prices. Brent crude and west texas underscore the riskon feel where we see west texas above 540. That is a precursor toward the recovery in oil to a timely conversation, a conversation with the governor of the central bank of saudi arabia. Please stay with us. This is bloomberg. Good morning. This is bloomberg surveillance. Lets get the first word news. Inonavirus is skyrocketing interior states that could mean trouble for president trumps reelection campaign. Cases have exploded in arizona and florida. Most about around the president must retain to win the election. Secretary will be the first these andwill involve others as they are expected to expected suspected involvement in jamal khashoggi. The financial industry is ramping up the pressure on the European Union over brexit bread Financial Markets in europe, warns there could be major disruptions by the end of september unless there is progress on the trade deal. Argentina has come up with an improved six 5 billion of in may,bonds paid argentina defaulted for the ninth time in its history. Global news 24 hours a day on air and at quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Francine, tom. Francine policymakers in saudi arabia are racing to mitigate the effects of coronavirus on oil prices. Anchor on bloomberg daybreak middle east is standing by. The saudis have pushed back against projections from the imf that they described as being too pessimistic. Showstest data on the pmi we are still firmly in contraction territory buried why dont we get territory. Why dont we get perspective from the governor of the saudi monetary authority. Welcome back to the program governor. Let me start with what you are getting from the latest data, what is your sense as to what the economic recovery could look like . Thank you. The imf forecast which you alluded to has put construction of the saudi economy at 6. 8 . We have remained. Despite the fact contracted by statisticsunced by and the core of the lockdown in the Second Quarter. The recent frequency data will pick up as a result of more because of those particularly. N anticipation we see a pick up a 50 in this andt six months in volume value, 12 . At more of aooking vshaped recovery and what economic role are you looking to lock in . I think its too early to say a vshaped because barring any Downside Risk from the second ore of the virus for example more events in the global see light at the end of the tunnel yes. Since the coronavirus hit, youve stepped in with all kinds of liquidity support programs. Some are due to expire in september. Do they get extended . We have a program of support and the first one was targeting the deferral payments with the funding for lending with 95 guarantee. To theo the guarantees program. Program, that was very successful with a 70 increase on that amount. , 50second was an injection billion which came later on right after june 1. The aim was to enhance the banking liquidity and this is given banks more room has given banks more room. The operations commenced at the end of june where we did not see a strong appetite from the bank given that we still plenty of liquidity. This we are still reading all the indicators, this will depend on the injection the quiddity. Liquidity. Allow me to interject and get to your view on the ongoing banking merger because last time you didnt take a view and then 6 million. Until are you at this point encouraging more m a in the sector . Encourage. T want to and dynamism. , they have the desire to merge and it adds value. And thats what we saw. Place,st merger taking , with his intention to separate. Agreed with the remember to merge, this is the initial stage and they are still in the process of the acquisition and it will be subject to the approval of all regulators. Governor, the Saudi Foreign currency reserves have been front and center of much of our coverage in terms of understanding of the coronavirus and low oil prices, the lowest since 2011. What does recovery on that front likely look like into the second half of 2020 into 2021 . With around 40 months of coverage of imports of goods and 80 of the broad stroke money. Our readings, what impacted this of the 40 billion saudi riyadh, but it was a strong hit. Reserves, there is more positive signals coming from the market which we see right now. Governor, in terms of the developments on the new licenses front, can you give us an update because we look at operations of , potentially opening new branches, have those been delayed . No. We have our criteria to accept banks and since then weve received a number of them. And weve been granted are waiting for them to operate. Problems, their covid some have been dealing with the opening and commencement operations. It did not we did not change any of these policies. Governor its always a privilege having you on the program, thank you for making the time. The governor of the saudi arabia monetary authority. Greatly appreciate that. We have much more coming up on this monday. Advancing oil getting out to recent highs. The worries about the price of energy, the chairman of the mta in new york city at 10 00 a. M. This is bloomberg. Tom good morning everyone. It was a small news item over the weekend on Commerce Bank of germany on commerzbank of germany. You may not know cerberus, front and center, former secretary of treasury john snow, a private equity shop buying and they have. Ought commerzbank the two leaders out the door this weekend. What happens next for this bank . I think given the time here the quite quickly they been both potentially in the midst of the worst session in living memory. Likehile the company would to resolve this quickly, i think this also you want the new chairman to be picking potentially you might want to take the time to go through that events so youre left with a more stable management for the mediumterm. What needs to happen for commerzbank, did need to merge or is a super manager going to be sufficient . This is the difficulty of course the commercial lender in banksrket competing with that are less driven by process and therefore this can be more costcutting shortly. Surely. It will be difficult to maintain since stable profit. Being here for quite some time. Seehe mediumterm we will putting together a costcutting plan. Here. Ts so interesting they have a history here including ownership of detroit and all that. Is this a private equity shop trying to make a germanic bank more Anglo American . Do i have that wrong . In, think when they came things are different. Turning the invisible , the two were involved in a discussion of a potential combination last year. This at the time. This investment has lost them a lot of money and they have to wrap up the pressure anyway they impart save in part, save face because theyre losing a lot of money on this public investment. Francine thank you so much for joining us. Out, you canories follow her on the website. Up next we speak with the ubs Senior Advisor to the chief executive. Hes coming up shortly. This is bloomberg. We started taking a cautious approach quite some time ago. Most powerful accomplice wirecard had. This is a liar just largest is it this was our largest decision but all the warning signs were there. Every Single Person who spoke out about wirecard was placed under criminal investigation. Its a very tough situation. Obviously it seems something quite significant was missed in the markets will pay a price for it. The fact that 1. 9 billion euros at first went missing and now appears to have never been there was always our belief. Not only the payments, we need a regulation. Stopose were some of our top guests on bloomberg weighing in. Its exposed a multibilliondollar fraud. Theyve also whether payments in europe have cap pace. To say joinsted us. Why is regulation not hundred percent caps off . There they just dont understand the fintech world as much as they should . Wirecardand foremost, exposes a failure among regulators. The other thing was that the haslatory structure, europe been so keen to drive open the payments mark that the regulatory change means firms fall between the cracks. Some aspect of pavement firms dont even get regulated and so for me there has to be a review or change and we need to focus on the gaps. The most systemic need to be regulated, they need to have plans if things go wrong. They need proper oversight. Payments, the value of data is growing we need to be really clear this data is appropriately regulated. Francine how are those gaps shifting and how her wrists shifting his problem of speed, truggled up mark shifting this problem of speed. Retailers is the the payment system. In europe we are much more flexible. Compared to traditional financial services. Part of it tried to break open the monopoly and make it much easier ride to nonbanks. These payment firms need to be regulated. Based on my read of the data. An acceleration in the adoption of contactless payments. Probablyt the u. K. Was four or six years and economy economy where cash usage has fallen. Based on the latest data im this is goingng to be ever more important to the economy. There is enough to talk about that i think it could be a two hour conversation. Im gonna stay on wirecard. The clearest recollection of the decline of Arthur Anderson off of enron. I am absolutely flabbergasted the focus on ernst young in this whole thing. Accountancy of wirecard, whats gonna happen in germany, whats gonna happen in europe what we clearly see is even the core business in the u. S. And focusing butn europe,s and focusing on investors. 5 . struck me that in itself should be a red flag. He fact he didnt raise a flag it is alow day tom slow day, i have to make some news. Is he get a move back to fix commerzbank going to move back to fix commerzbank . Is, low rates are a huge burden on the banking system. Thats a pretty heavy burden. We say good morning from francine and tom keene. Swiss and german banking. Thanks for being such a good sport today. Really interesting there on wirecard. This story, for those of you waking early in america, this is on theng in a real issue highly regulated versus nonregulated financial industry as well. Much more coming up today across all of bloomberg. We hope you stay with us on Bloomberg Television and bloomberg radio. We continue, this is bloomberg. Tom what about the rest . Some, when work for will the many find employment . Goldman sachs shifts and delay their recovery towards 2021. Still 9 unemployment next year. Delay inl be little terms of global support. Stocks surged this morning. After delay after delay after pipelineere will be no west southwest of charlottesville on the appalachian trail. Dominion exit. Warn profit to the rescue. Good morning everyone, this is bloomberg surveillance. Francine is in london. We will have a good conversation with the economy with carl weinberg. I will tell