Margin. The result is seen as pivotal for the future ties of the nation with the European Union. And u. S. Banks are braced for the worth order since the quarter for the worse quarter since the financial crisis. Jp morgan kicks off a big rank week. Good morning, it is 6 00 a. M. In london. It is getting hot here. With an untamed virus irrationalional exuberance in stocks. It could get tricky. Goldman has upped their view of their earnings. Yall so have the gilead story in terms of remdesivir helping the severely ill despite the untamed virus in florida exceeding the peaks of new york and texas. They are still below consensus and there are deals there. The dollar drops. Two straight weeks of a demolition of the dollar. Yields traded at. 63. Do you buy the rally . Im a believer, are you . Copper is the shining narrative. Copper is ripping it up there this morning. You are looking at the longest 20 16. Streak since is that a wakeup call to the Treasury Department . On willudis turn the saudis turn on the faucet . You also should have a bit of gold. Let us talk about the virus and the surge in hotspots across the u. S. Florida broke the daily record for all u. S. States. New cases. 5,000 markets continue to shrug off the fears. Mike nova grexit is warning mike is warning that tech stocks are in a speculative bubble. This is a bubble. Certainly in the tech space. I dont think jay powell would say he wants the market higher but we are kind of unhinged from reality. The economy is grinding slowly. The tech market makes new highs every day, tesla is up 10 . That is a classic speculative bubble. We are at really dangerous valuations on the tech side. Is zoom or tesla or whatever a stock has a story, everyone is rushing into and that gets me worried. What does that mean for the Retail Investor here . We have been doing a lot of work with the mom and pop investor coming into the market. Are you concerned they could get burned here . Certainly. This reminds me of 2017 and the cryptocurrency. A lot of people bought been and then it collapsed. These stocks though are not like are Real Companies but they are being valued way ahead of where i think reality is. What ends bubbles usually is centralbank action. We have a big election coming up. Let us assume joe biden wins for a second and i think he will, ratef a sudden capital tax is raised. Not priced in yet. We are still in a euphoric stage of the market going up every day fueled by tons of liquidity. Let us talk about biden. Heterday he was saying that does not believe the shareholder capitalism can continue. To takeinvestors going in that thinking . Wall street was already moving in that way. Paul jones has something called just capital. Alongfink is on the train with Mark Andreessen tons of people have been moving in that way. Java shareholder only is not working. Peoplellowing too many behind. Funds a rise in est esg funds. Is wanting to lead wall street. That is not a big concern for the market as much as the tax code. I want to go back for a second because you were talking valuations. Yhigh what is that mean in terms of how you are investing . A friend of mine said in markets like this you want to be on the airplane but in the seats closest to the exit. The reality is that i missed this tech move. I have not been participating. I have a lot of friends that are making a lot more money that i days. Se i have a lot of gold and bitcoin. They are also participating in this liquidity driven bubble. Liquidity will not go away. Manus mike, a very candidate ceo. Speaking to us exclusively. My guest host is bill street, the ceo at kbl. , crazy markets, bubble like come irrational exuberance. Is merely on steroids. Good morning. Bill good morning, manus. I think the tech stocks and the nasdaq and the hang seng will continue to dominate. Thats you really believe what we just traveled through what not have any structural changes to the economies and how they work. The tech stocks will continue to dominate. They are the classic stocks going forward. Else,licy, if nothing need to tell economies how to behave and function. Monetary fiscal and will continue to support the longterm Growth Stocks going forward. Of behavior, we have popped in terms of havens, we have popped up a board. The. Com era lacked legitimacy. You were going to get this kind of return. Treasury,o be long yen, and vix. And gold. In terms of havens, what would you be prepared to take extra on board for a haven trade . Correlationk at the it is not just what safe haven you can go to come it is how you balance that in your portfolio. If you are overweight with the tech stocks and longterm Growth Stocks, it may feel a little heated at the moment. So what you put into your portfolio will give you that balance. For us, one of the longterm. Iversified is treasury and gold. Gold has had some very good correlation functions. It has been performing very well, it is very liquid. You dont have these concerns with gold as you might as compared to techniques such as using the vex. Using the vix. Health and you like emerging markets and you are not frightened to make the hard decisions. Untamed the show with virus versus irrational exuberance in the stocks. You could say we are in the low lands of phase one of this covid19. What do you need to see to shift more overweight . Bill let us look at it this way, manus. The pandemic have has been a very atypical event. The response to this has been pretty typical in terms of the policies, the fiscal policy and the Monetary Policy coming together in a very eloquent way. An eloquent way way. What is coming out of this . You are looking at growth but also a degree of inflation. How is inflation going to manifest itself . We dont quite know yet but what we do know is there is a very high likelihood that you will have a system asset price in inflation. That is what we are seeing at the moment. Be market will continue to impacted by intervention. For in termsooking of potential downsides or to in ae even more active risky asset space . I think there is still a Downside Risk of a lack of therapeutic response. Manus we are going to pick up the inflation narrative in a moment because that goes back to a conversation i had on friday evening. With inflation coming you do not have a fully accommodative centralbank narrative. First word news this monday morning. Elections in poland. The president ial candidate there it is too close to call for the candidates to claim victory. A highly charged campaign with a high turnout since the fall of communism. Credit suisse is considering cutting hundreds of jobs as the coronavirus boosts online operations. The bank is looking to save money and meet profit targets. The new ceo is said to be considering cuts to the lenders Domestic Branch networks. House trade advisor, peter navarro, says he expects President Trump to take strong action against tiktok and wework. He told foxnews that the administration was just Getting Started and would not rule out banning them. He rolled out the sale of tiktok to an american buyer would not even be enough to solve the problem. Global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. Coming up, there is a lot of the ticket items on the agenda for this week. ,he Second Quarter kicks off gdp from china is just the order douevres the hors for this weeks offering. This is bloomberg. Manus this is bloomberg daybreak europe. This is a manus cranny. China set recovery in to continue albeit slowly. Weekdp data is out this and it is expected to show resilience despite the resurgence of covid19 cases in beijing. The real gdp is expected to year. By 3. 4 this that is higher than the Consensus Forecast of just over 2 . Bill street is my guest host. The Chinese Markets are ripping it up this morning. Up over chinas chinex 3 . Worried,stories get it is 2015 again. Valuations might tell another story. There is the growth. We reckon at bloomberg that we are returning to growth. Over 3. 3 . Is up forecast, how our important to global risk on narrative is that china delivers and delivers well . Think it is important. Look at chinal very closely. They were first in terms of the pandemic and first out. You have to be a little careful about the comparisons because the chinesees that authorities have been able to use cannot necessarily be replicated in the west. Commandandcontrol to escape from this in a more organized way. We are looking across the world for incremental growth patterns and that is what we are seeing out of china. I suspect when we look at the consistent exit less uniform to be and that will create a little more concern as we look at the economic numbers in the u. S. And europe. Translate i just narrativey to tie the in china to emerging markets because you have a pretty strong core in terms of emerging market sovereign debt in hard currencies. What is the most attractive . Just talk us through that. It links exactly to your introduction on china really. When we were looking at how we were managing risk in the portfolios of our clients come up where did we want to increase our exposure . The emerging markets were the first key place for that reason. Andnew china was first in we knew they would be able to get control of their of economy using fiscal levers. China dominates the emergingmarket complex. As chinas incremental growth comes through, the Government Debt has been forming well in the hard currency space. Ill, we have mark ok, bill, we have more work to do. Coming up, banking pain. Are expected to stay in their numbers this week and Analysts Expect the worst since the financial crisis. That is next. This is bloomberg. Manus it is daybreak europe. Barnstormerto be a of a week. The battle of Central Banks will continue. Here are the events. The governor of the bank of england will be speaking 55. Ebinar entitled he will be joined by John Williams. The panel will be moderated by our very own francine lacqua. The uks office of budget responsibility well published three economic scenarios on the impact of the pandemic. As a monthly gdp and industrial released. Ing data is when you get to wednesday, it is going to be the bank of japan publishing their Monetary Policy decision. Thursday is the ecb and Francine Lagarde will hold a Virtual Press conference. And on friday, the 27 nations will meet in brussels to hash out the details of the massive economic stimulus package. What will be the compromises . And another item on the agenda, the u. S. Bank earnings are expected to be the worst this quarter since the financial crisis. They will give indications of how these three methods these three months of covid19 measures are impacting the economy. Take me through what you are focused on in terms of the retail bank agenda. Dani it is likely to be another record quarter. When we think back to the we only had aer, few weeks of the pandemic to judge. Have come out of three months of the pandemic so we should get a clear idea of what exactly the economic pain is going to be and how the banks will prepare for it. Because we had this soaring unemployment picture, it means a lot of their consumers and customers will be unable to pay back debt. And they are unlikely to have asen out new bonds or debt well which means the Interest Income is also going to be a real weak spot for the banks. Ane banks are in important part of their earnings have been Service Charges and credit card fees. And given the stay at home or does, it is likely those will has suffered as well. Wells fargo reports tomorrow. The previous quarter they said ut 4 billion for though low provisions. Hear the cheers for ficc and then the reality may be on the margins. Silver lining. Give me something to fly a kite with. Nejra is not here so i am a bit lonely. Is likelyty trading to be a bright spot given the hunt for cash and the increase in volumes. 31 s expected to rise about for all of wall street banks. Jp morgan is expected to see its trading revenue rise 50 . That will certainly help them out. One other area that might be strong for banks will be mortgages given how low rates art. Spotsl, one of the bright that i think a lot of analysts will hope to find in these earnings is that this is just a temporary hits from the coronavirus rather than any sort of existential capital issue for these banks, manus. Street has more on the forbearance of the regulators getting us through this. This is what will drive this. Reality check may be on the landing but it is about forbearance in this trump administration. It will be a tailwind that will help them out. Trading revenues will be tailing off quite significantly for the backend of two to. Of 22. The regulatory forbearance on the capital treatment will also be a factor. We also have to remember for the longerterm theme is the boards may throw win as much loan provisioning. Putting as much in in the first two quarters as possible. I suspect what we will see in the backend of q4 when we come out manus bill, we are going to pick up that in a moment. The clock has ticked down. That is my guest host. We were turn right here on daybreak europe. Morning from bloombergs middle east headquarters in dubai. Im manus cranny and it is daybreak europe. Global stocks rise. Looking for more clues on the impact of covid19. Florida setting a record for the states. Ly cases in the polands president ial election is too close to call with the incumbent ahead by only a thin margin. The result is seen as pivotal with the future ties of the nation with the European Union. And u. S. Banks are braced for ther worst quarter since financial crisis. Jp morgan kicks off a big week for the banks tomorrow. Has just gone 6 30 p. M. 6 30 a. M. In paris. Still fly high with the untamed virus and some would say a touch of irrational exuberance and where to go. Guest says they will still be overweight equities. Goldman raises their earnings per share. Air. Are deals in the analog bidding. The dollar index rose, all hail the rally. Ofre is a certain amount correlation between the demolition of the dollar and the rise in equities. There arerises bonds, 0. 63 . Copper, absolutely barnstorming ahead. Are the longest in the u. S. They have been in two years. China gdp. Oil drops i 0. 7 . By 0. 7 . Gold is up by 0. 4 . Those are your markets. We are in risk on mode. Bank meetsn central this week, they will review the radical suite of measures. Economists do see some Central Banks adopting boj styled policy. While the new york fed president John Williams says the fed is thinking about it very hard come at the ecb official has ruled it out. Eu leaders will meet later this personr a person to meeting, the first in months. The block would have 750 Million Euros of bonds. Michael raab spoke to bloomberg saying the socalled frugal for will not stand in the way of it the socalled frugal four will not stand in the way of an agreement. Solidarity and unity are key for us. We have to send a clear signal to the question to the countries most affected by the pandemic. To agree oneasy such a huge amount of money but i fully agree with the Member States which expressed the very strong commitment to the future oriented challenges of the European Union which means and moredigitalization in our common interest. What we really need is the willingness to form a compromise. There is some tension right with the Recovery Fund in the socalled frugal four. Some of the states want a certain conditionality in terms of dispersing the funds. What do you think can be offered to the frugal four to get a deal . I agree. Financial focus our activities on climate, digitalization, rule of law, and social cohesion. And there is room for maneuver but at the end, i am rather optimistic that we will agree as soon as possible. As soon as possible means maybe even next week or do you think this could spill into august . It would a speciald be responsibility for all Member States. What we need are Swift Solutions and a very ambitious outcome of the negotiations. I hope we can reach an agreement that is acceptable for all in july. Germanys michael roth speaking exclusively to bloomberg. What could the end of the week bring . A boost in the arm. Bill street is with us. If i look at European Markets, london is up 1. 1 . Bankstocks euro stocks are is upoxx 1. 3 . Relative to the u. S. , how do you compare . , as we stand today, as we look at the broad indexes between the u. S. And europe, europe is still lacking. Part of it is the composition of the indexes. Will continuees to make up things. Europe is dominated by the fangs the faangs. These are the first green shoots of a federalized fiscal approach. Movement ofnto this federal fiscal policy for europe which is all about grants and not about loans. Sovereign involve credit risk and be fortified by a much more homogenous response excess which we obviously know the u. S. Is struggling with as well. For the second half of this year, there is a strong narrative about looking to europe versus u. S. Going forward. Manus you say this is an attractive entry point for european highyield. Why . Bill well, so actually the is one of our first moves. We knew that the Central Banks were going to be coming in. We knew that government policy and Central Bank Intervention would be supported. And it would be supportive of a Government Debt market. Between ig and highyield does have a relation. If you look at the Investment Grade market and if you look at the risk premium being offered in the highyield market over the Investment Grade, it was compelling. Very rar