A survey. And the lebanese government overns amid public outcry last weeks explosion, threatening the debt restructuring deal. It has just gone 6 00 a. M. In london, 9 00 a. M. In dubai. A good day to you. Dipping into negative territory. On a more serious note, trump talking about the possibility of unilateral Capital Gains tax cuts is the equity story and ignores the beijing bustle or hustle. Reports from china against the u. S. , but i love this story because i remember the iraq war. The seven deadly unknowns that drive the dollar lower, and talking about complacency, we are complacently complacent at heart, too optimistic about the vaccine, too optimistic about the u. S. Good morning. How are you . Good morning, and i do think this is interesting. We saw the dollar higher, and i felt there were two different attitudes. Some said it was risk off because of the escalating tension and the u. S. Moves on chinese companies, but you could say, hang on, it is a risk on day, because of the decline in hospitalizations and some of the key u. S. States who have suffered the worst. So you put your own interpretation on it. As you say, it is softening a little bit today with a general riskon tone. Manus those equities, there is unilateralial of action on taxes from trump. Take it away. Is interesting because of the dollar. Perhaps, it is driving the dollar. If we take a look at asian equities, they are having their biggest daily advance. They have risen the most in a week, looking at the msci index. Japanese stocks coming back online after the holiday. For they, we saw green s p 500, but the nasdaq ended in the red, a second day where the tech stocks underperformed, and the russell this is a general risk on tone as i was saying. The 10year yields near a high. The dollar softening feeds into that risk on tone, and you have currencies outperforming in the g10, and well is also on the front foot again. Oil is also and on the front foot again. Coronavirus infections over 20 million, the latest sobering milestone as the virus creates havoc across the low. Steadilyd has accelerated, doubling in weeks, but there is some reprieve for the hardest u. S. States, including new york, california, and texas, reporting falling hospitalizations, manus. Have, indeed. Democrats and republicans remain deadlocked over the stimulus with no new ideas for restarting talks. Meanwhile, President Trump says he is looking at a tax cut on Capital Gains, something he dropped last time because it would not have helped the middle class. President trump you will hear the next coming weeks, and i feel it will be exciting. The Capital Gains tax is going to be a lot of people put to work, and there will be a cut in the Capital Gains tax. Executive said we can debate the nuances of whether he can act unilaterally on Capital Gains tax or not, but another stimulus with a potential Capital Gains tax cut, these are all the layers of the cake for the bulls, or is that just overly bullish these are all the layers of the cake for the bulls, or is that just overly bullish . Good morning, manus. It is clear from where i am sitting, this is traditionally new as a reaction, and a Capital Gains tax, for the rally, we know that the fed is actually willing to step in at any point in time and support the markets, at least the fixed income space, so given the present backdrop, i think one of the things we are losing sight of is the potential real impact on the economy over the next months. We have markets pricing in a great deal of accommodation. Actions ofriced in this administration to move forward on the Capital Gains tax, so we are seeing the market rally further. I struggle to see an Inflection Point at this point, where we can see this in equities. The outside risk coming in the next few months. So at this point in time, i can definitely see the market continuing to rally or at least sustain nearterm levels as long as the possibility of a tax cut is in the rising. Ok, can i get your thoughts on what is the biggest driver of Dollar Strength right now . We have talked about the dollar being driven by risk on risk off, roro. U. S. Chinassing the tensions and the stimulus and the current situation. Of those three, what is driving the dollar most right now . Lookingnk what we are at the dollar right now, you have to look at what is the main driver over the past 1. 5 months or at least five weeks. Since we have had the European Fund approved, there has been a flow into specifically your currency. , so ifket is short euro you look at it, the dollar has suffered a tremendous amount against the euro and is suffering against the swiss franc and even sterling, which should not be seen as a haven. It has seen it unwind. So in terms of china or stimulus or the elections, i tend to think the china story is being overplayed. Shut down consulate in the u. S. And the reaction by china, to shut down the u. S. Consulate in china, and the resulting impact on china, and i think what is driving the market right now in terms of the dollar view is the theme of further accommodation, further q. E. , by the fed, it does not recover. There is liquidity, and this is catching obviously the gold bulls, so you are seeing gold and silver commodity pairs rally and, potentially. Now, we can compare that to australia, which has seen some rallied, and that has potentially. So i think this is a backstory now. I think the real story will be the inherent risk of the elections and the impact that will have on fixed income. Have a situation where we a contentious election or a close election, i think we could see some inflows into the dollar as money moves out of equities and into fixed income, even at these very low rates. I think we could see some haven running into fixed incomes. Now, outside that, i think we depression,tangible 1 , 2 , 3 , and going into the elections, we have to take it back and see where the next move will be. Ok. S so there is a lot to digest there. Lets just finish off on the dollar. The 30day. And the into 2020 to, market is pushing for negative rates again in 2022. Will they come, and is that the under driving dollar negative . Negative rates, we have heard from the fed that negative rates from the fed will not be forthcoming, but, obviously, the real rates or in that territory at this point in time. The furtherropping, the dollar will drop. The point being if we focus on how much liquidity the fed will i would will be say there is a bigger driver of Dollar Strength. Yes, you could argue the fed is impacting real rates, boosting those inflation expectations, given what they have said on policy. We will pick up on that as our guest stays with us. Now, lets get to first word news. Thanks. A second not a protest in belarus as the incumbent lukashenko, claims a landslide victory in the elections. Of election was marred allegations of fraud and crackdowns on the opposition. U. S. Secretary of state Michael Pompeo says the u. S. Is deeply concerned, as the elections were not free warfare. President donald trump abruptly left a News Conference after a person was shot near the building, prompting the Security Service to usher the president out of the room. The white within house gates. President trump returned moments later. The u. K. Is looking at the most about theirrogram Coronavirus Program not reaching enough cases to be effective. Global news, 24 hours a day, on air and on quicktake powered by , more than 2,700 journalists and analysts in more than 120 countries. This is bloomberg. Nejra . Manus . Nejra thank you so much. The lebanese government steps down following the explosion last week at the porch. Up next, a member of parliament. This is bloomberg. Bloomberg is daybreak london. I am nejra cehic. Manus cranny is in dubai. A warning that a second wave of group sees could be on the horizon. One person said the u. S. Economy has hit danger given stimulus and that support will not last forever. We have been through a massive first wave of restructurings, and i believe the second wave really depends on what we were just talking thet, that many of weaknesses at Many Companies have been disguised or hidden by very significant government support. As that support is withdrawn, or even as it is not continued at the same rate, the pressure on many corporates will become more manifest, and i personally, unfortunately, think we will see another significant wave of bankruptcies across Corporate America as that plays out. A corporate banker, people want to talk to you about your corporate plans, but lazard has some work, with lebanon, argentina. Situationplain the you are seeing with sovereign debt . What kind of demand to investors have to invest in countries that have these issues related to the pandemic, but then all of these other add on issues that are rising, as well . Eter well, what is happening in these countries, some of them had preexisting conditions that were exacerbated by the pandemic, but for a whole set of other countries, the pandemic is causing a whole lot a fiscal pressure, just like it is here in the United States for state and local governments, and we situation with a the federal government. Then a significant increase in public debt, and, unfortunately, for many sovereigns across the globe, they are not in a position to handle that additional debt, and then that causes a debt crisis, as it were. We are having some promising signs about creditors and governments coming together in argentina, ecuador, and elsewhere to reach agreements to deal with these problems before they become outright crises, and we will have to see whether that spirit of cooperation can continue into what inevitably will be other sovereign debt problems over the next year or two. More sovereign debt problems arising, obviously, these are countries with much weaker financial positions. But what becomes to United States as our debt levels change . Today there was a report on the deficit for the first months of this year, more than double what it was last year, not surprising. We are running a fiscal experiment, but it is run that we have to run, because the alternative of not providing support to the economy to offset the impact of the pandemic would be much worse. It would cause longlasting yes,e to the economy, so, debt is increasing in the United States, but that is ok. Peter, you also have a birdseye view about the tensions between the u. S. And china. What is of chief concern to your clients right now . The relationship with china is complicated. I would say in the technology space, in particular, you are seeing a more rapid deterioration in the relationship, and some people are calling it a Technology Cold war. In other aspects of the relationship, we need to remember that the relationship with china is much bigger than what you read in the newspaper or what you see on bloomberg, where most of the flashpoints are in technology. That has been building for a while and has accelerated over the past months. There are Many Companies who are concerned about the implications. We will just have to see how this plays out. Manus the ceo speaking exclusively to bloomberg. Our guest is still with us. How important a driver in fx markets right now are deficits and the fiscal space that various countries have post covid . I think the focus right now is primarily on the present policy, which is driven by the fed accommodation. The further the accommodation goes, the further the fed shows they are willing to increase their accommodation. The further the u. S. Government is willing to spend, the further the dollar will depreciate. That is the main theme right now. We have moved away from the risk on risk off. I think a lot of people are going to currencies. If you look at it, it is working in that direction for the mediumterm. This continuous deficit spending we are seeing is going to impact the currency. Now, we can see that happening in europe. It is a different game area but in terms of the dollar, that is the main driver we are seeing in the currency markets. You see it clearly. You. thank ok, we will talk about others more. Our guest host this morning stays with us. Taking responsibility, the lebanese government has resigned following last weeks explosion at the beirut porch. Up next, we speak to a lebanese member of parliament. This is bloomberg. It is daybreak europe. I am manus cranny. Government has resigned following last weeks explosion at the beirut port. In office for seven months, the government was blamed. Asked the Prime Minister to continue in a caretaker capacity until the new government is formed. Jabber is with the lebanon parliament. Great to have you with us. There is need for substantial political change. As we go to elections, given what is going on in lebanon, is there a real possibility of real political change . Where is the responsibility . Good morning. Mr. Jabber good morning. There is definitely need for change and to move forward. Of course, lebanon is a democracy. Change has to be made by the people by changing their voting habits, by choosing different , so that is why there is a call for an early election. As you know, there was another two years. But taking into consideration what has happened concerning the but, not only the explosion lebanon was down economically and financially even before this happens, and this explosion actually broke the back of the isntry, so i think change different than before. Absolutely, yassine. Great to have you with us. As you said, there was a need for change even before this latest tragic incident. What should the top priority be . Where should it start first . Mr. Jabber the first step is actually to try to get the peoples confidence first. Practically, i think the first step would have to be reaching an agreement with the imf, because lebanon was on track to do that, and lebanon needs such a program badly. We need the money. It will open other doors for us, and also, as you know, the imf has a very strong program. Yassine, time is always against us. We have been hearing this for months and months. This is part of the reason the last Prime Minister resigned. He did not deliver the deal with the imf. The imf has been clear about what needs to be done. Who will be doing the imf deal . Mr. Jabber it is an issue of reforms, you see . We need reforms, Structural Reforms. The various sectors, especially electricity, communication, aviation, and many other sectors the issue is there has been resistance on the political scene. Onwards, thehere resistance persists, i think the country cannot delay anymore. Yes. now, the imf set out conditions for talks to move forward. Restoring the National Sovereignty of the state, cutting state owned companies, passing a law to regulate capital outflows, and setting up a social safety net. Is all of that possible, yassine, all of it . Mr. Jaber if we have the political will to do it, and that is what we have to gather. That is something the new government has to have a mandate to do. Actually, i have been involved with the imf. We know what they want. What we need to do is to move forward. And i agree with these conditions. We need the capital control law. Restructuringrt the whole public sector. And when we see Structural Reforms nejra thank you for joining us, and we have run out of time, but do join us again. Thank you so much. Coming up, gdp data is set to confirm that the u. K. Fell into a recession on employment figures. We will discuss that next. The market is lightly risk on. This is bloomberg. Businesses are starting to bounce back. But what if you could do better than that . Like adapt. Discover. Deliver. In new ways. To new customers. What if you could come back stronger . Faster. Better. At comcast business, we want to help you not just bounce back. But bounce forward. Thats why were helping you stay ahead and adapt with a network you can count on, 24 7 support and Flexible Solutions that work wherever you are. Call or go online today. Manus good morning from bloombergs middle east headquarters in dubai. I am manus cranny. Nejra cehic is alongside in london. It is daybreak europe. These are your top stories. Stocks push higher as u. S. Coronavirus hospitalizations drop. Elusiveimulus remains as President Trump floats a cut to Capital Gains tax. To. Jobless rate is expected take above 4 today. We will check the Economic Sentiment from germany. Resignss government amid public outcry or accountability. Disrupt threatens to any prospect of a debt restructuring deal. Nejra welcome to daybreak europe. It is quite clear, risk on in the markets. If you look at equity markets, it seems that perhaps they are being driven by some of the optimism around the u. S. Surface,ics below the or you have seen tech stocks outperform. The dollar has been a bit of a conundrum. Manus it has. Said, it is going to drive the dollar down. The question, if you get stimulus, between 1 trillion credittrillion, is it positive, equity positive, or junk bond positive . Nejra what i also thought was interesting was that he said the focus for the dollar was going to be very much the election rate the election. The market has perhaps not got its head around on the market will drive the dollar. Manus huge portfolio changes will be made, according to sergio ermotti. Is somey in the u. S. Say the driver. Have a look at the markets. With equity futures along euro stoxx 50, all the little bit that are this morning. Is it that narrative . In asia, nobody seems to care that china has gone after a number of elected officials in the United States on a titfortat. Dollar inextricably linked. The butter of the street bottom of the screen, junk wants to get all of the level. One of the cheapest five year junk rated deals. Elementia aluminum cans. Who wouldve thought aluminum cans would make the bond market so sexy . Nejra anyone looking at or reacting to the fed. Lets get back to covid. Topic 2