Commerzbank. There it is, new york city, the private equity firm really going after commerzbank. They throw out the chairman, the ceo, and you have to wonder how t adjusts the plan from adjusts the plan. The body count of three major european banks it is a stunning 61,000 redundancies just over the last number of months. Costcutting has got to be front and center for mr. Sewing. Francine he mentioned that a little bit. We also had a conversation on wirecard, saying there is something that they need to look at even more. Lets get to first word news with your take a group that. Reportedeijing has zero new coronavirus cases for the first time in 26 days, a sign that a resurgence that the second wave in china is now under control. Instead of an across the board lockdown, beijing tested more than 11 million people. Anthony fauci says any Coronavirus Vaccine would be limited in how it would provide protection. He told a Video Conference that Health Officials assume a shot would offer a degree of protection but it is likely to be finite. He expects there will be an answer by early 2021 as to whether any of the more than 140 vaccines being developed would be safe and effective. The u. S. Government paychecks religious Program Organizations and law firms linked to president trump. Treasury secretary Steven Mnuchin originally had refused to disclose the name of the companies. The u. K. Is going green, protecting jobs in the wake of the technology. The government will spend almost three point 8 billion on environmental projects, including making public billio building screener. The plan will be unveiled tomorrow. Global news 24 hours a day, on air and at bloomberg quicktake, powered by more than 2700 journalists and analysts in more im ritikauntries, gupta. This is bloomberg. Francine . Tom . Tom thanks so much. Equities, bonds, currencies, commodities. After that huge correlated day yesterday, any number of reasons for that the chinese news, and of course kicking out dominion, the gas infrastructure. A big day yesterday. We give a little bit back. The vix at the 28 level gets my attention. John newman will talk about that in a moment im sure. What i emphasize with the data check is what is not going on. What is not going on is yields are moving, and we have seen basis points flattening in the last 24 hours. The equity markets, particularly tech market, totally delinked from what we see in the bond market. Francine that is a great angle that we need to spend more time on. Im also looking at european stocks. They are dropping from a onemonth high after we had germany data that is disappointing. It is industrial data and it was weaker than expected. That means there is uncertainty about exactly what path the recovery will take. , dollar expanding. Treasuries not really moving. Wti crude slipping toward 40 a barrel. Warning us to talk about the markets, john normand. Always a pleasure to speak with you. If you look at the nasdaq, it is really up, and you look at disappointing data. When do the two match up . Do we need to go back to fundamentals to look at where asset prices go he from here . John asset prices and data are next month or two, to really reconcile, you need some feedback loop from higher infection rates to consumer confidence, less spending, lockdowns, rollback of the economies, as you can see the gap between the two start to close. What you really need to see that feedback. When coming out of recession, the data are very strong in a fairly uninterrupted fashion. And the markets check up with that. If you are going to call for some sort of breakdown in that entum francine does it mean that a means a correction, or will there be some will it be the other way around . John it is starting to demonstrate a little bit of fatigue and the data. You would think some of the jobless comes, mobility data, credit card spending none of this is critically large in terms of impact, but it is starting to seep through. My guess is that is infection rates continue to move up over the next couple of months, you will see a slight loss of momentum in data and a slight loss of momentum in the markets. I dont think it will be a large correction because client particularlyot linked, especially with markets. I think it is more of a move into a range from consolidation later on this summer. Dampening of yields, a flattening of yield curve, hunkering down into what seems to be a listlessness in the bond market. What does that signal for equities, or are they completely delinked from bonds . Bond market has become completely dealing from the Business Cycle is sexually because of Monetary Policy in the central bank. You no longer should associate higher yield with a stronger economy or higher yields with a stronger stock market. Listlessnessee the and bond markets as a warning sign about equities because they think of yields as reflecting pessimism on growth. To some extent, there is that pessimism on growth in terms of effectiveness with Monetary Policy. [no audio] well, i think weve got some technical difficulties here. Matthew, tell me what to do as you can. We are talking with john normand of jp morgan right now, and there seem to be some technical difficulties. This is so important, this conversation with mr. Normand. We are going to break, we will readjust our technical set up with mr. Normand, as he is on his 4000 acres in the north of london or scotland or some island in the north sea. Im not sure. We will continue. Francine lacqua and london, tom keene in new york. Stay with us. This is bloomberg. M bloomberg surveillance good morning, everyone. Francine lacqua in london, tom keene in new york. Were speaking with john normand of jp morgan. He writes pieces on the correlation and the linkage of the market. Sometimes out of nowhere they can be an event, an exile janis nous event or outside event. We talked with joyce chang about this yesterday. Could m a be the big surprise of the second half of this year . Money costs nothing, does m a really goose the market . I thought this was going to be an independent catalyst, but i dont think if you believe as i do that the cycle has significant momentum right now, if you think profits will follow that, then of course m a activity will pick up and ipo activity will pick up. In general, the levels are reduced from a decade ago. Or even doing that in the late 1990s. Im not sure if it is an independent catalyst. I look at where we are, and of course we lost you there at the end. We were talking about the linkage of the bond and the equity markets as well. This equity market is extraordinary. Amazon is up 69 off the march lows. There is a tech rally to it. How does that correlate into the other assets . How does it correlate to foreign exchange, to bonds, even to commodities, or is it a completely separate equity event . John i think of it as somewhat separate because most of what is going on right now in terms of leadership is around tech and around quality. Int is not really replicated credit markets because Technology Companies are not the issue. The spread markets led by the same dynamics you had in place in the u. S. Equity market. Currencies do not have that quality phenomenon either, and even though the u. S. Equity market is depleting, it is not delivering trend Dollar Strength. There are other flows in place in currencies that go beyond relative equity performance. I think of it is something unique to what is going on in u. S. Stocks. It is certainly the biggest performance differentiator between u. S. And nonus markets in the past decade. It doesnt really have huge spillover effects to credit markets are currency markets. The closest analogue you could get is to look at Regional Equity performance in asia or some of the currencies in asia which linked to tech stocks, but beyond that it is limited spillovers. Francine john, what is the perfect haven right now . There is no perfect one any longer. The perfect when used to be Treasury Bonds are government bonds because we knew the Central Banks would change the price of money. If i needed to boost the price of fixed income, the price would occur. Now with yields so low, with gold,avens, one is another is currencies. In terms of the ability to hedge equity market declines, the Central Banks are cutting rates. One is potentially the u. S. Hybrid market, that the fed is moving into sort of a spread regime, and the gradual sense, maybe providing a little more hedge protection. Think you had a basket of those defensive and semidefensive assets. Francine what do you make of European Assets right now . We had that disappointing industrial data out of germany today. Are we going to see apache recovery . John i think are we going to see a apache recovery . Be patchyink it may in the euro area. With less stress in the labor market, and consumption is going to evolve forward. That will make europe look uncharacteristically strong relative to the u. S. Coming out of the recession. Im not sure that necessarily trendings with outperformance with european equities in the u. S. Popularo makes it less among the european economy. Im not sure you can translate this economic story to better performance versus u. S. Bonds. John, thank you so much for joining us. , head of assets process it strategies at jp morgan. This is bloomberg. Tom bloomberg surveillance, from london and new york. We say good morning to all of you. It is important and a time of high unemployment, to look at the policies of america. Our david westin with the conversation with the secretary of labor, eugene scalia. The Paycheck Protection Program has been important for americans employed by Small Businesses, many of them minorities. That helps keep them on payroll, and the president has continued to replenish and support that program. Then we have this very substantial unemployment benefit in the cares act which the president signed, 600 dollars a week. That has been important to americans put out of work, too. Longerterm, david, what i would say is going to be most important is what worked before. The president s policies that incentivize business growth, that is going to being to bring jobs back, what will lead to longterm rising wages. The usmca went into effect last week. Nafta was ushered out last week. That is going to be a really good thing for american jobs, too. With there is no question those numbers, everybody was happy to see them come out last thursday. We still have a long way to go. We have millions and millions of americans who still dont have a job right now. At the same time, the numbers youre looking at absolutely. We still have agresta make. David the numbers you are looking at we still have progress to make. David the numbers you are looking at stopped at midjune. How confident are you . The surveys come youre not getting the same level of response in your surveys. Are you confident in the numbers . We are confident in those numbers, david. We are getting the Response Rate may need to our surveys, to stand by those numbers we are putting out. That is a question that i ask occasionally, and i am satisfied in that regard. You are right, we are seeing rising cases in some locations, and in some states, and that has to be taken seriously. I see that as a warning for americans across the country, that the virus is still out there. We still need to practice social distancing. When that is not possible, quite often we are going to need to wear masks. That is being reinforced. Cdc, thely, the department of health and Human Services and others, and the federal government, are responding very quickly, getting added personnel out there, bringing their expertise to bear, controlling those outbreaks. And i think we can continue to safely reopen, as long as we are careful, as long as we bear in mind the lesson that we observed in california, arizona, and elsewhere. To take one example, there are still 900,000 fewer people employed in health care right now than in february. Those are all jobs that will come back. Employment in the government sector all jobs will be coming back and i think will be coming back in the weeks ahead. Talked abouty, you the ptp and the supplemental unemployment insurance. Obviously this is a big issue right now in washington, with another round of fiscal stimulus. We talked about this before. Have we made any progress . Do we have any sense of what is appropriate or what is necessary . July 31 is the deadline on unemployment insurance. Unemployment and the cares act at the end of the month. When we talk about stimulus, again what i would reinforce, the usmca is going to stimulate the economy and job growth. Tax relief, that is going to stimulate job growth, and i think that is something that will be talked about toward the end of the month. The president has already emphasized how he wants to take a closer look at eliminating the regulatory burdens that can free up our economy more. In terms of unemployment benefits, i think there will be discussion. It is clear to me that the 600 a week benefit was a really good thing to do when the economy was being shut down, we were closing our economy. But i think it looks very if an in an opening economy, particularly one that is doing so much better than people were expecting back in march. I think we are ahead of where we thought we would be, and the 600 benefit, it expires at the end of the month. Francine that was the u. S. Labor secretary, eugene scalia. Lets get to the bloomberg fitness flesh with ritika gupta. Ritika Samsung Electronics reported betterthanexpected profits, rising internet traffic. Recovered from the coronavirus slump. Tictoc is pulling its viral video out from the hong kong mobile stores in the coming days. It is the first Internet Service to withdraw ands beijing imposed that National Security since beijing exposed impose that national secured law. Toc that is the Bloomberg Business flash. Francine . Tom . Thanks so much. The tape rolls over. We had that big pop yesterday, weakness into the close in new york. We continue that right now with futures at 28. Notice the futures at 30. The vix is out to a 29 level. Vicks from7, 26 yesterday, and we come back three big figures on the vicks. On the vix. Move ando see the bonds extremely range bound. Some Dollar Strength today as well. Im not going to call it nervousness, but certainly a giveback of mondays enthusiasms. Please stay with us. Francine lacqua in london. Im tom keene in new york. This is bloomberg. The best tv experience just got better because now you can watch all your favorite hulu shows and movies on xfinity. Youre only a voice command away from Award Winning shows like the handmaids tale, to new hits like little fires everywhere. And fx originals you can only watch on hulu. Thats just the beginning of what you can experience with hulu on xfinity. Tv made simple, easy, awesome. Too early to judge but i can say one thing and that makes me overconfident, that we are in line or even ahead of our plan which we gave covid and that makes me comfortable for the year 2020. Francine that was the Deutsche Bank chief executive speaking in a webinar early on. The conversation is with the First Anniversary of lenders sweeping restructuring. He did caution that the second half might bring a slowdown. In terms of trading, june was actually pretty strong. The trade momentum is continuing in june. On m a, he was very cautious. He was asked directly about merging with commerzbank. He says he does not want to comment on speculation. Here, jes interesting staley with much the same tone about a good Second Quarter. You get to the third quarter, there is a huge mystery as well. We discussed banking in europe. With our first word news in new york city. The president of the atlanta fed sees signs that Economic Activity is leveling off. Says some of the things he sees suggest the recovery might be a bit bumpier than it might be otherwise. There has been a pickup in the coronavirus cases in the u. S. Recently. President bolsonaro has undergone another test for coronavirus after showing symptoms of the disease. Bolsonaro has been seen mingling with supporters while not wearing a face mask. China has installed a hardline team to enforce the new security law in hong kong. The citys chief executive is still the top Decision Maker on most issues but will now be more closely supervised by officials who have come up to the communist party ranks on the mainland. The uks trade deal with the European Union is not the only one british negotiators have to worry about. They all expire when the u. K. Leaves the eu at the end of the year. Amongst the countries in that group, canada, japan, and turkey. The u. K. Is seeking new deals with the u. S. , australia, and new zealand. Global news 24 hours a day, onair and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Francine, tom . Tom thanks so much. Bloomberg surveillance and now we consider gold. We look at the guesstimate. Our guest has a view of 2000. T is theimportan heritage of his firm. A dominantank is now player within the finance investment of australia. Marcus garvey joins us now on gold. It is real simple. Every article i see talks about a real yield compression, inflationadjusted yields are low, etc. Is it safe to say that chairman powell and other central bankers have initiated a surge in gold . Marcus i think thats a reasonably fair summary, yes. Our framework of thinking about a gold price as a defensive portunitys the oddp cost of holding. We have seen it compression in that opportunity cost or in many cases, taking that opportunity cost negative. That is why you see both institutional and retail investors, and Central Banks, increasing gold allocations in their holdings. Tom how have supply and demand dynamics adjusted to this surge . Is there something notable you see in the demand of gold . Is julie resales lower jewelry sales lower . Marcus we have seen quite a mixed bag, actually. Holdings have moved above 100 million ounces. There has been strong western developed markets demand for things like coins and bullion. Is a function of demand destruction. We are not at alltime highs in the dollar yet, but we have been. That has been exacerbated by coronavirus. If you look at things like indian imports, where during lockdown, they essentially fell to zero, which is unprecedented for a single month. We have seen big hits to emerging market demanded this year. It has not been a traditional physical emerging market demanded driver has been leading buying. It has been very much financial and more so developed markets. Francine how does gold compared to silver, platinum, and palladium . I know you see an upside over the Second Quarter of 2020 into 2021 for these three. Marcus yes, so i think one of the issues you have with other members of the complex is they are, to varying degrees, Precious Metals, but also industrial. If you look at the goldsilver ratio, over time, the ratio actually moves quite well with changes in the pace of Global Industrial production. Logically, that makes sense. If Global Industrial production is accelerating, silver is benefiting from precious aspects of its demand number but also industrial. One of the things we are looking at, as we come out of lockdown aboutly, and concerns u. S. States, if you get that Global Industrial recovery, then that is a kicker for some other parts of the Precious Metals complex. We should see their prices have a period of relative outperformance. That is quite a change in dynamic from 2019, where gold was rallying, and silver was rallying with it. What happens if the u. S. China trade war comes back at the forefront . Marcus i think that is certainly one of the risks for Global Growth over the course of this year. I think in the short term, its going to be secondary to the almost mechanical process of, as we come out of lockdown, we have seen that initially in china with the pace of the rebound in things like automotive production and sales. We have started to see that in the u. S. , things like the ism. Obviously, the most recent data point and we expect europe to follow. Platinum and palladium, they have had an incredible hit to demand over the first half of this year because of the contraction we have seen in the automotive sector. As you now see, that sequential as you now see that sequential path improving, it will take some time to get back to the prior level of global auto sales. As we go through sequential improvement, we get a better demand picture than it has been two, three months back. That has been naturally more positive from a price perspective. Of if you look at a law gold chart and inflationadjusted, it has been an extraordinary move. I know you are at 2000 per ounce. Can you extrapolate gold out years, 10ear, five years to a substantially higher price . Marcus i think it is possible but it is not our base case. If you can consider the current gold rally to that that we had 0042008 leading up to the financial crisis or after the financial crisis, if you look at the magnitude of those rallies and say, could gold do that again this time . You would look at gold going to Something Like 2300, 24 hundred, maybe even 2500. The problem with making that comparison is that we are already starting from very low real yields. To believe that gold can repeat that, i think you have to think that real yields can go very materially negative. Can we see real yields of say 2 . ,f you think that is possible you can construct a scenario where gold goes through 2000 but that is not our base case at the moment. How not our base case, but do you get to a logical scenario where gold trades that high . If you actually see some erosion of peoples belief in the dollar as a reserve currency. You see more pronounced dollar weakness and gold outperform because of it. What we saw in the First Quarter of this year when during the real stress of the crisis there was a dash for dollar cash. With that so recent in peoples memories, it seems unlikely that we are going to so quickly move away from the dollar as the ultimate global reserve currency. I think it is a scenario you can look at potentially on a longrun basis and people will debate, but not something we can play out in the short to mediumterm. Francine thank you so much. Marcus garvey there ever macquarie bank. Up next, we speak to Paolo Gentiloni. He is the european commissioner for the economy. We talk about the Recovery Fund. That is coming up next and this is bloomberg. This is bloomberg surveillance. Lets get the Bloomberg Business flash. Tesla has been on a roll. The electric carmakers valuation has added a combined value of detroits victory. Three. As big Institutional Investors now want a piece of tesla and the electric car market. The secretive Silicon Valley company has filed confidentially for a public stock listing. That is a major step towards a market debuted that has been years in the making. Palantir cells Data Analysis dataare used by sells Analysis Software used by governments. The pandemic is said to lead to the biggest meat eating retreat in decades. Per capita consumption will fall by almost 3 this year to the lowest since 2011. Meat consumption will not return to prepandemic levels until at least 2025. Francine thank you so much. Up next, Paolo Gentiloni, the european commissioner for the economy. We will ask him about some of the downfalls we are seeing if there is divergence in europe. That is coming up shortly. This is bloomberg. Francine this is bloomberg surveillance. Tom and francine from london and new york. Management the aries chief executive officer discussing the new 3. 5 billion special opportunities fund, which is designed to sweep up the of companies hurt by coronavirus pandemic. I think we all have to be very careful and we have talked about this before that we do not conflate the markets and real economy. Allhile the technicals and of the liquid markets that the fed has been supporting are fantastic, if you peel back and look at the fundamentals, the recovery is uneven. We have to make sure we dont confuse a rebound versus substantial recovery. Where is fed liquidity not reaching . Where are things attractively priced . We have been able to find distressed opportunities in firstorder covid impacted Industries Like travel and leisure, advertising, media and entertainment. If you move to the second order, you have to look at it in two places. Where is the liquidity not finding its way . Thee are certain pockets of mortgagebacked Securities Market that have not been supported, some Small Business loans, some corporate loans, private equity backed loans. So there are a number of pockets in the market that have not benefited from fed liquidity. That is a place where we can come in with our own liquidity and provide that support. As we have all seen, even though liquid markets are functioning, there are a host of private companies who never really prepared for a world with zero revenue. Everybody is now liquidity planning and thinking about building a bridge to the other side of this health and economic crisis. We have been a big capital provider to those companies. You started out with a 2 billion target. You exceeded it considerably. Why not more . The reason i ask, as you are well aware, firms that compete with you are raising multiples of that, north of 15 billion. Want to raiseres a bigger fund . We are. We tend to be a bit more diversified in the way we raise capital. We told the market we raised close to 7 billion of new capital. In the Second Quarter, we have raised an additional 6 billion of new capital. This particular strategy was 3. 5 billion but fundraising continues at a Pretty Healthy clip. Wet of the strategies where are seeing accelerated fundraising are able to play the markets location in some way. Francine that was the Ares Management chief executive officer. The eu summer 2020 Economic Forecast just released projected that the european economy actually will contract by 8. 7 in 2020. We are delighted to be joined now by Paolo Gentiloni, the european commissioner for the economy and former Prime Minister of italy. In your forecast, you talk about wider divergence good morning between Member States and their economic recovery. How dangerous is that for the cohesion of europe . Is in fact, it challenging for the region of europe. Of the fact that we proposed common tools and the common recovery plan. What we are seeing is that all Member States of the union will have a negative growth this year, and a rebound next year. The differences are there. We have countries with 11 of negative growth, for example, italy or spain, and countries with 5 or 6 , for example, germany or poland. So these differences cannot be consolidated in the future. This is why we need a european common recovery plan. Francine how important is it that you have a Recovery Fund by the mid july meeting, next week . How important is it that we get it now and not wait . Importantl, it is because this is exactly the right time. Europeaned all our economies. But itovery is underway, is still surrounded by uncertainty. This is exactly the moment when of have to send a message confidence and you have to send a message against fragmentation. So, we cannot accept the idea that a common crisis will have such uneven consequences. The time is now. The recovery is now beginning and we need to have a common recovery and not a different recovery in different Member States. This is the reason for a common tool. Each european member state had his own reaction its own reaction, its own fiscal intervention. A common one is strongly needed. Francine do you think it will be approved shortly . How do you get the frugal countries on side . Are you willing to negotiate budget rebates . Well, this will be one of the issues in discussion. Because as you know, we have connected this common Recovery Fund to the budget, the multiannual budget of the union. Ofhave different tracks negotiations possible. I am rather confident we will reach this agreement this month because i am seeing a really unprecedented awareness in all Member States, also the more reluctant ones, on the need for a common european response. If you had thought to europe, or the European Union borrowing in the Financial Markets hundreds of billions of euros only a few months ago, you would have considered it crazy a crazy proposal. Now, we are discussing on the amount of different allocation keys. Everyone accepted this idea. Commissioner, how concerned are you about developments in the u. S. , where infections of covid19 are still rising fast . How much of a risk is it for the present outlook in europe . Concerned, we are first of all, we are concerned for the american communities, American People of the consequences of this pandemic still very strongly. Second, we are concerned because r main trade ou partner, especially for export oriented european countries. We need to reestablish strong trade volumes with the u. S. Third, we are concerned because this pandemic in the u. S. Is contributing to the danger that we have now, which is the danger of uncertainty. Recovery needs to overcome uncertainty to gain full speed. Tom that was Paolo Gentiloni of the European Union. We have much more to talk about today. I really want to make it clear that this is our equity interview of the date, Charles Kantor will join us. He is with neuberger berman. Incredibly important interview for those who enjoy owning these booming tech stocks. An ever more important interview for those that have missed the boat. Charles kantor on the boom in amazon and others as well. Francine lacqua in london. Im tom keene in new york. Stay with us. Another hour of bloomberg surveillance. Tom this morning, cases of the virus rising. Melbourne takes severe measures. The governor of texas, too. Dr. Fauci considers finite protection. Ashore,s are sure they need finite protection. 30 . 00 index up it is summer. School is out forever. Good morning, alice cooper. Ring are going back in september, right . Im tom keene in new york. Francine lacqua in london. It is slipping in as a backstory. It is on the front page of every newspaper in america, this idea of this horrific pandemic and how do we actually do academics this