alix steel, guy johnson is in london and this is the european close. here's the headline from the u.s., tech outperforming, forget that bearish close, still all about tech. >> it's amazing to see it happening, and it might be an argument against why you would want to pull money out of the u.s. and put it in europe. this is a debate that wall street is having an we are having over here. let's talk about where we are in terms of the markets right now. if you say equity markets are a little slow, but in europe we are still trading on incredibly light volume related to the hundred day average. most of the markets are down, with stoxx 600 down by 4/10 of 1%. the pound is getting a little stronger as this has progressed as we have seen this dishing out

an additional 30 billion to the economy plan. last night and took it to the session into europe, it looks as though the trump administration is going to take a harder line when it comes to hong kong and we will return to that theme in around half an hour with more insight on what the british government is trying to do to kickstart the u.k. economy and we will be joined by steve barker, and that conversation is live at a time in london and 11:30 in new york. had cash for clunkers in 2009 and i guess you guys have cash for food. let's take a look at where we is ourting, scarlet fu senior markets editor. >> the s&p is off of its highs,

the nasdaq and the nasdaq 100 are at record highs, no surprise that you have the record highs in apple and amazon. what we have been seeing are the european stocks moving, with plenty of demand for safety with gold prices moving about $1800 an ounce. speaking of, take a look at these names, they are all at record highs and the bigger getting bigger. they have demand for their services and products which goes a long way. cameron crise put it this way in his note, this is a top-heavy rally. the nasdaq 100 gets almost 50% of its market value from five names, and you could really see nasdaq you compare the 100's relative performance to the s&p 500, the white line versus the blue line which is the nasdaq 500s relative

performance to the equal weight index. is 76 percentage points, and thanks to dave wilson for putting this chart together for us. at european look banks because europe is down now, and banks are the leading decliners. and thisof arguments, is like a deteriorating revenue outlook and it has downgraded the stock. we are also keeping and i on a london-based thing which gets out of hong kong. guy: we will talk more about this a little later, scarlet, thank you. people talking about the s&p 500 , and the s&p five is very top-heavy.

let's take a look at what's happening in europe, this official clip is outside of germany, the german chancellor, angela merkel was in brussels today. urging the european union to unite to confront which she has called the biggest challenge in its history. in these times of crisis, we don't want to forget the path ahead of us, we want to implement this for the future. and that means that the money that we want to use for the recovery will simply not be invested in getting us back to where we were, but will rather be a step towards the future. i believe we will have good cooperation on this. guy: angela merkel and the official head of europe at the moment. when we look at the prospects of

investment in europe, we have our guest from morgan stanley. greg, thank you the time -- thank you for taking the time for being with us. a lot hinges on what happens next in europe, because the way you approach of -- the way you approach a global investment portfolio. we will see a summit in a few days on the 17th and 18th which we will -- which some help will nail down the program that angela merkel was talking about. this is a substantial program which is designed to help europe's economy recover but it is becoming more likely that we will not get a decision. if you are sitting on wall street now and you are thinking of taking money out of the united states, how critical of a decision is that in terms of your thinking when you look at what's going on with european politics? afternoon and good morning everyone. it is critical from a medium-term perspective that this happens.

it's not critical that it happens next week but it is critical that happens in the next couple of months. we think it morgan stanley, right off the about when this was announced, we were positive, calling it a game changer. if you offer up something a significant as this and for any reason take it away again, that's a very negative situation for europe and we are confident that this proposal will get through. we don't always move in a straight line in history would suggest that we perhaps need a number of summits to get it done as opposed to one. i think a short-term delay with markets a little disappointed, but ultimately, we can look through that. suggestonger delay will

that the proposals being watered down and that would be a much bigger challenge for people like ourselves who are making the case that -- alix: let's get to the outperformance conversation, what's behind it? is it that stimulus will be better in europe than here in the u.s.? is it a value trade? is it the benefit for unemployment and businesses are different here? what's the thesis? premiumink it is a risk thesis. we don't expect the european economic recovery to necessarily be stronger than what we see in the u.s., and the policy response is not as big and europe as the u.s.. but i would put it like this. we have been worried and europe for the last decade or more about the risk of the eurozone breakup. that means the risk premium on

european assets have been elevated because of the concerns of the breakup. if this proposal passes, we this it signifies that will not necessarily fall to zero in terms of risk but it does fall. unless political risk comes down which would allow european valuations to go up. there were some policy uncertainty indices and what you find is that european policy uncertainty is that there is already a low relative to u.s. policy. time,ld be an interesting when you have a presidential election in the u.s. which could lead to volatility. at the same time, there is risk in europe which is falling

materially. it is a valuation and waiting story of european assets. went to have had the re-rating, do you put the money to work elsewhere? how sticky will it be? what is it that provides the catalyst to want to keep the money in europe? --that's a good question graham: that's a good question and i am confident that europe can do better. i think longer term more of a challenge and with the other comments on your show just now, europe's reaction to tech is a problem longer-term. we have a report today that there is a firm exploring how europe might spend the money,

and does depend. whether or not it goes to near-term stopgap spending or longer-term investments, only time will tell. i think there are pockets in europe like the esg angle and the green angle which could potentially offer very attractive returns to investors over a multiple year timeframe. this is better than what we will see with some stronger nominal growth. personally i think there is enough upside for europe over the next three months to six months and i'm not particularly fixated on what the next one to three years looks like. i think we will cross that some point -- at some point in 2021. there's enough upside now in the

coming months that we can get this done. we don't have much more time, do you distinguish between countries right now on a short-term basis? graham: there are some folks on the periphery. the key beneficiary of this proposal are financials on the periphery. i think we go over the money goes. so pretty free over the rest of europe is the key function. don'tdon't fight the fed, fight the ecb. thank you for joining us. coming up, the world health organization says the virus now hangs around water droplets. more on what we are doing to contain the pandemic. this is bloomberg.

alix: -- alix steel with guy johnson. haslatest in the u.s. revolved around schools within new york city, the mayor saying that kids could go back to will in september for about two to three days. president trump really weighing in heavily on reopening schools and pushing back against cdc guidelines. joining us now is a senior pharmaceutical analyst for boom lurk intelligence. this -- as this debate becomes politicized, what's the science behind this? sam:sam:. my firstquest --sam:

question for you is there anything that isn't politicized in the u.s.. we have to deal with the scientifically, rather than making it a back-and-forth partisan issue. we do the children, generally, there are examples of kids who got covid-19 and had her e-cig -- horrific disease, generally they are not infected. they get infected but they don't get the disease that we worry about. but of course the risk is that they are still transmitting the infection and we have to watch out for that. in terms of what's happening right now with the science, i'm struggling with one thing in particular and the market is trying to figure this out. we have a growing lag between the rising case count and

mortality in the state which is going down. greater, oretting is it that we actually have a different demographic and as the age demographic it's lower and lower it's unlikely we will see the mortality rate rising? hospitalizations are presumably a factor and once those are getting to a critical level, maybe they reconvene? the i have seen hospitalization rates for a couple of states looking pretty horrific. but let's step back from trying to overanalyze and perhaps celebrate the possibility that we have become better at managing this disease. whether it's because of demographic shifting, background immunity because of being infected with some other

coronavirus some time ago and i have some sort of immunity in terms of managing the disease, or because the hospitals and physicians have gotten better at , andng with the disease finding people early enough to treat them etc.. it is likely to be a combination of all of the above. as we have said many times in this discussion, everybody is learning as they go forward. let's hope that you do not see a spike in deaths. that would be great. jam: overanalyzing is my sam, that's what i do. the scientific view is getting very polarized in the u.s., as the disease changes, dr. fauci was talking about that, we need to change the metrics we look at and the milestones. know, i have a

norma's respect for dr. fauci, that is something you will only there's not passes, evidence that the more infectious virus that we see now is more deadly or disease causing. way,tory usually goes this as viruses mutate they become less severe. only time will tell. guy: what is the significance of transmission through water whylets, i can understand places with monsoon like india how that would work but wise that a problem for the rest of us? sam: it's a problem for the rest of us if we guard -- we are

going to continue playing games with if we wear masks. there have been plenty of studies with laser photography etc. shown that as i am speaking loudly now, i could emit water droplets that are sufficiently large to carry virus up to a meter away from my body. that's how anybody in my vicinity who inhales those water ofplets becomes at risk contracting the infection. if i am wearing a mask and they are wearing a mask, the risk becomes lower. to these water droplets hang around in a room where there's no air movement. that's a problem. his office environments and elevators are on trains and planes and commuting, if folks are not wearing mask and there's not enough ventilation you are breathing in each other's water droplet, which is a pretty

horrific thought. guy: i had a novel experience yet the day, for the first time ever in my life, the hairdresser said i was not allowed to talk. usually there's attention there. sam, thank you. this is bloomberg. ♪

guy: welcome back. you are watching european close p let's talk about what's happening in hong kong. hbv c is getting pummeled in the ftse 100. bloomberg reporting last night that president trump, some of his advisors may be discussing a plan to punish banks in hong kong by destabilizing the currency due to the latest

escalation in tension of the u.s. and the region. our guest joins us now, henrietta, is this targeting the chinese authorities? or is it targeting those who have business in hong kong. i'm wondering why the u.s. would want to undermine hong kong and the hong kong dollar? henrietta: that's the perfect question to ask. not only are they targeting hong kong in a way that would have massive repercussions to the u.s. economy and the u.s. stock market, but they are doing so theoretically with this move despite having many options which would much more directly get china, specifically banks that are helping chinese are actually threatening hong kong's atoll to me. there have been bills in the senate and the house that have

gotten to the president, which allows the sanctioning of officials but also imposing secondary sanctions on financial institutions on those who have involvement in facilitating the hong kong autonomy rule. there are other ways for the administration to go about it and it seems like they are pulling ideas out of the ether and thinking anything that punishes hong kong impacts china and had to be our goal. move would have blowback on the u.s. as it exchanges in our currency. here in the u.s. tech companies on their own, microsoft, google, amazon, are trying to understand how they respond to government request from china for data for hong kong users and what their role should be. what do you do if you are a company with a heavy presence in hong kong? henrietta: that's exactly right. and the question you are asking

is the one the administration wants you to consider. we have seen that since the trump on the trade war cut -- the jump on the trade war. the threat of these listings are all designed to get you out of china, whether or not tariffs work or an aggressive trade war goalfective, the luminary and the hope is that u.s. or manufacturers will decouple from china either organically or because of the political uncertainty. that's a feature, not a bug of this administration's u.s.-china strategy. guy: is there a danger that this does not work out? if i was hong kong i would say you know what, i'm not paying my currency to the dollar, i am pegging it to the yuan, which would make the u.s. look impotent. a number ofhere are

voices and washington, d.c. who are stressing that point, trying to get the administration to back off some of these more erotic -- erratic moves. and the labor is that you want the united states to be the number one market and exchange to be listed on and you risk undermining that by doing like delisting used chinese companies from u.s. exchanges. it's an important component. guy: thank you for your time today. thatd airlines is warning 36,000 u.s. employees have jobs at risk. this is bloomberg. ♪

guy: european stocks are wrapping up the day. the very light volume once again.

a number of factors to contend with. continuing uncertainties around the virus. we have watched u.s. tech continue to drive higher. european equity markets midrange. very light volume. stockop in focus -- one in focus is united airlines. at the end of the summer the cares act money will run out. there was a provision when they took that money they would not fall.ople off until the that process will begin to start with demand as it is. they are unlike to have sustained cash flow in anything they have been. this will ultimately fall on -- jet fuel has come down, probably not enough. a lot of people are likely to lose their jobs. let's talk about what is happening with u.s. and european

equity markets. we will deal with european equity market in more detail. we have not had a great day. banks have been under pressure. it is a volume trade worth focusing on. hsbc is the story. the dax down nearly 1%. the cac 40 over 1%. we have seen strength in the ftse 100. if you see strength in the ftse normally that feeds the other way in terms of pushing the 100 down a little bit. a stronger pound, weaker ftse 100, but that is not what we are seeing right now. in terms of the u.k. budget, it did drive a few stops higher but -- a few stocks higher. there is your stock breakdown. a defensive bias today. the miners have had an ok day. china data continues to be good.

gold is up. copper continues to be a story to focus on. defensive's like food and beverages doing relatively well. construction, travel and leisure, all tracking lower. let's take a quick look at individual names. i want to highlight what is happening in terms of the single stocks. has -- since we saw the problem out of washington with the white house and staffers talking about hitting hong kong hsbc down 3.11%. first group, this is a travel company, it has the greyhound group, it is under considerable pressure. i saw numbers earlier on suggesting travel on the greyhound bus is down 80%. persimmon one of the beneficiaries of what the chancellor has delivered today.

another demand stimulus in terms of cut in standard gdp. the real focus was on jobs. 30 billion pounds added in u.k. stimulus has been delivered the fark by the chancellor. -- deliveredinued so far by the chancellor. here are some of the things he had to say about the economy. >> i want every person in this house and the country to know i will never accept unemployment as an unavoidable outcome. we have not done everything we have so far just a step back now and say job done. in truth, the job has only just begun. in many ways this is something you never would've expected from a conservative party government, but seem to

begin spending in terms of jobs and investment. bevan joins us now. we have seen the house bill doing relatively well. brewing companies doing relatively well. is there anything in the budget that would encourage you to invest in some of these names? no, quite frankly. for me the biggest concern is on the housing market in the next year. what happens on credit availability. [indiscernible] he has identified he is keen to ensure people get back to work. this will ultimately be credit availability that becomes a real challenge. i do not think the arrangement in any sense is addressing that challenge.

likely to see something like a decline in prices. that is baked into the cake, i fear. alix: what about restaurants, pubs, things like that. i was making fun of guy earlier, so we have cash for clunkers and they have cash for burgers, you're getting paid 50% to go to a restaurant. does that help you feel better about that sector? james: i certainly think we are in a better position than we might otherwise have been. when i think about the medium-term prospects of the economy, i still think we are going to be talking about an unemployment rate between 6% and 7% by the end of this year, compared with 4% at the end of 2019. i think the weekly earnings year 2021, and atise in

the same time price inflation in the u.k. may trough 5.6% year on year. people will not feel well-off. the real challenge is what will the bank of england do. inflation pressures will start to live -- what we still have big government? the is a big question markets need to wrestle with. for me the big risk is bonds and not equities. [indiscernible] guy: it was interesting today, french inflation projected bonds has been incredibly well

received, very strong demand. people starting to position for that inflation surge you are talking about. how should i position my portfolio? let's start with the big stuff. 60/40 portfolio equity versus bonds, you are saying the risk lies with the bond portion. how do i mitigate some of that risk? t.r.y. quality end of the equity market might take you down to 80% to 85%. technically speaking i am talking about relatively low -- able tohink would be focus on companies exposed to secular growth, and if i'm correct in saying we will have a difficult economic climate, the sector is -- then physical growth.

fiscal growth. i am not of the view we get a sharp v-shaped recovery. i think we get a flat kit. -- a flat kick. that is all about rate quality companies. taking in terms of the u.k. i would be talking about unilever. more globally there are fantastic companies in the states like striker. alix: what about china? james: i worry a lot about china at the moment because of the mounting tension with the u.s. and the unraveling of globalization, which is incredibly important to the structure of the u.k. economy where we continue to import from china.

there is a lot of talk about weaponization of the hong kong dollar. i think there a reasonable chance the peg breaks. the pego back to when was formed in 1983, it comes at a time when -- the risk of hyperinflation. the hong kong people put up with terrible inflation and deflation period in the 1980's and 1990's and 2000's. think the -- if the peg has disastrous consequences the economy will be falling. wonder whether they take that princi -- whether they take the currency that is relatively stable to get the u.s. dollar.

-- do you see anything with exposure to hong kong? would you sell any with exposure to hong kong? there is plenty of bank credit. of course i agree with you and i look at the great global banks like j.p. morgan -- they have huge opportunity to get further gains after the rounds of acquisitions that are bending down. your challenge of what happens -- itg kong -- i agree will simply become have china. alix: we have to leave it there. ofat to talk to james bevan dcl l.a. investment management. we want to give you an update on

what is making headlines outside the business world. here is ritika gupta. twoka: at the supreme court keep rulings involving religion. meanwhile, the court also gave for trait to religious goals that say the constitution give faith-based groups more power to hire and fire employees carrying out important functions. the president of mexico taking the biggest gamble of his months in office. he is in washington to meet with president trump despite warnings from his top counselors not to go. trump is reviled south of the border for having called mexicans criminals and rapist. warren buffett has donated two point $9 billion in berkshire hathaway stock to different

charities as part of his annual plan. berkshires has buffett donated -- is it timeat to break up some of the big tech companies? bloomberg's erik schatzker put that -- pose that question to billionaire barry dillon. -- the only actual monopoly. the others have varying levels of competition. when you have monopoly power, you have to have regulation. i think in the next couple of years we will probably get closer to it than we have ever been. i think that is healthy. ritika: global news 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. i am ritika gupta. this is bloomberg.

guy? guy: thank you very much. equity markets are now closed. we are few the option process. -- we are through the auction process. nevertheless we finish near session lows. unlike the united states europe is finishing in the red and it is the cyclical names that are under pressure. banks are down, the car sector is down, the travel and leisure sector is trending lower. the ftse is down .5%. the dax down 4%. 40 down 1.2%. clarity on the u.k. government of the top of the hour on the table show. jonathan ferro is in new york. i will be joining him in london on dab digital radio. this is bloomberg. ♪

>> and two months are economy contracted 25%, the same a mounted crew in the previous 18 years. property transactions fell 50% in may. house prices have fallen for the first time in eight years, and uncertainty in the market. we need people feeling confident renovate him a move, and improve. that will drive growth and create jobs. to capitalize the housing market and boost confidence, i have decided to cut that duty. this moment is unique. we need to be creative. i have decided for the next six months to cut back on food

accommodation and attractions. i want every person in this house and in the country to know that i will never accept unemployment as an unavoidable outcome. we have not done everything we have so far just to step back now and say job done. in truth, the job has only just begun. the job has only just begun. the u.k. chancellor of the exchequer speaking earlier in the house, unveiling a 30 billion pound economics to me as planned. joining us with the details of the plan is rob hutton, bloomberg u.k. government reporter. this is what we expected. money shoveled out the door. my question to you is was there a sense from government we will have to do more in britain, that the job is not complete, this is just an interim step. how much more expensive will the

scheme become to protect the u.k. economy? would love it if they do not have to spend any more. i actually think the underlying message that i picked up today was if in september they judged they have not done enough, that people are still looking at laying off large sections of the thing,nd that sort of particular sectors are in trouble. the strangest thing about that we hadement is it at all. in march we had a budget that was supposed to be the budget to deal with the virus, and that was out of date within a fortnight. he was announcing other stimulus measures and putting the whole nation on furlough, and since then we have had a series of interventions. i think there is an implied

promise that if more is needed more will be spent. alix: i wonder if what they announced today it will be enough to offset on furlough protection rolls off, or if in september they will need extra boost. paying employers to bring back their employees and basically giving money to young people who cannot work. where'd you land on that? rob: it is just so hard to know. there are lots of little individual things. i was talking to one small business who had it very nice -- i spent three months in the garden everyone is paying me and it is great. i was talking to a pub who said we could function as we are, but to start getting our staff back to start serving people properly

with the existing rules, that would not work. i think a lot of this is about trying to say give it a try, try taking people back on. we will help you. here is incentive. but see if we can bump start the and will put my car into gear and see if the engine starts going again. lots of this stuff seems to be aimed in that way. restartthe engine does in the u.k. economy trundled off , did we listen to a future prime minister today? think richey soon act would be happy that question was being asked. aside from the massive economic toll, the thing that struck me

as if you look at all the branding, it did not describe it as a conservative effort, they did not describe it a british government effort, they described it as rishi's plan. branded as he is doing this. that must be being done with some level of consent from the prime minister. i think they are trying to build him up. he looks very popular. the thing everybody says about this is it is easy to look popular when you're just spending billions of pounds on things people want. the hard thing will be if it does not work. if it does work, you have somebody who is suddenly quite well set up when boris johnson decides he has had enough and would like to move on, or possibly even before boris johnson has decided he had enough. you have somebody quite well set up.

sense, if politics you had someone who unveils trump's job plans, democrats would hate it no matter what is in it. is there not that kind of divide or pushback within the british government? are we looking at a unified thing. everyone unified is one person or one thing? the labour party had ago criticizing this. there's not much they can criticize. broadly this is the sort of thing that can be done. their criticism is more around things being done by other things in government, which is easily the right moment to be trying to get people back out onto the streets and back into restaurants and back spending. there is a second spike of the virus and the virus is still around in the u.k.

isn't this just going to make everything worse? was not much of doing.ngs sunak was you can find labor mp's approval of his -- what he's doing because this the kind of thing they've always wanted to do. alix: if only things were that simple. i have learned in the u.s. it is not. rob hutton, appreciate you joining us. johns hopkins university is putting out the u.s. coronavirus cases are now topping 3 million. governor cuomo in new york offering more information. he says new york city schools will reopen. that decision will, in the beginning of august. he did wind up saying malls would be able to reopen as well. i'm trying to find the exact headline. state, not at is a federal issue when it comes to schools. more updates in the u.s. on the

coronavirus cases, now topping 3 million. this is bloomberg. ♪

alix: finally found that headline. governor cuomo of new york saying malls can reopen in the phase four with air filters. that gives optimism for the s&p. the school debate raging in the u.s.. turning into a political issue. that wraps it up for guy and me in new york. coming up "balance of power" with david westin on bloomberg tv and radio. ♪

david: from new york to our tv and radio audiences worldwide, i am david westin. welcome to "balance of power," where the world of politics meets the world of business. i am david westin. we start with a report on the markets. we turned to kailey leinz. a lot of conviction, but the nasdaq seems to be pairing up. kailey: that is right and we have seen the s&p 500 flip between positive and negative territory. the dow is basically flat. as we alluded to, it is a tale of tech outperformance. the nasdaq the outperform on the session, up when 8%. the index continues to climb higher. i am thinking the big five stocks, the apples, microsoft, facebook's of the world. investors need to be favoring these names over the others given the fact they are high-growth, they have strong balance sheets and can weather any economic downturn, and the fact they have services and products which are in more demand in a stay-at-home world.