| Want the lowdown on what's moving European markets in your inbox every morning? Sign up here. Good morning. Donald Trump is to make announcement on new China policies, more stimulus is coming in Europe and virus hot spots are shifting. Here's what's moving markets. 'Not Happy' China's approval of Hong Kong security legislation in defiance of the U.S. raises the stakes in the increasingly antagonistic relationship between the two. President Donald Trump said he'll announce new U.S. policies regarding China on Friday, saying his administration is "not happy" with Beijing. Larry Kudlow, Trump's top economic adviser, said China will be "held accountable" and that it had made a "huge mistake" in passing the new security law, though it remains unclear what the ramifications will be in terms of sanctions. Wall Street has billions to lose from the frictions and a trade war stands to hammer the value of American companies. With no off-ramp in sight, the situation only stands to get worse. Stimulus Sequel Germany is preparing plans for a second phase of stimulus spending in a bid to supercharge the nation's recovery from the pandemic, as Chancellor Angela Merkel seizes the opportunity to remake the country's economy. More details continue to emerge for the European Union's 750-billion-euro package, including who gets what and that strings will be attached in the shape of reforms to be implemented and that the grants and loans get spent on green and digital policy priorities. Bankers, traders and asset managers are all bullish on the plans, however, which is driving money into riskier assets. Yet lingering in the background is Brexit, where the EU thinks the U.K. may have given up on agreeing a deal. Shifting Hotspots Lockdowns are easing across Europe, albeit with slight different guidance everywhere. French cafes, bars and restaurants will reopen Tuesday while the U.K., where business confidence remains rock-bottom and where people are still mostly staying at home, will allow up to six people from different households to meet up, as long as they do so outside, socially distance and wash their hands. In New York, Governor Andrew Cuomo wants to make mask-wearing a part of daily life in the city. Elsewhere, the situation is less optimistic. India became the latest country to see its virus death toll top that of China despite putting in place the biggest lockdown in the world, and Latin America now accounts for 40% of all daily Covid-19 deaths globally with rates surging in Brazil and Mexico. Social Order Beyond dealings with China over Hong Kong and domestic Covid-19 policies, President Trump also signed an executive order seeking to limit liability protections for social media companies, a move sparked by Twitter fact-checking his posts on the platform. He even singled out one Twitter employee in a tweet complaining that the decision to fact-check his tweets on mail ballots would "taint" the upcoming election. Wall Street thinks it's just "noise" and will have a limited impact on the companies the order targets but it highlights the divergent approaches taken by Twitter in directly fact-checking presidential tweets and by Facebook Inc., which has taken a more hands-off strategy. Coming Up… The buoyant week in European stocks, with four consecutive days of gains for the Stoxx 600, looks set to end on a down note. European and U.S. futures are trending lower after a mixed session in Asia ahead of Trump's address on new China policies. Anxiety about U.S.-China tensions is also trimming gains for oil, though crude remains on track to have its best month in history. It'll be a quiet Friday for earnings, though watch for an possible announcement on job cuts by Renault SA and some noteworthy data arrive in the form of GDP for France and Italy along with inflation data for the euro area. What We've Been Reading This is what's caught our eye over the past 24 hours. And finally, here's what Cormac Mullen is interested in this morning Longtime laggards value shares have surged ahead of their growth counterparts this week — the MSCI World Value Index is up over 3 percentage points more than the Growth gauge — set for the biggest weekly gap since 2009. But a sustained revival in a basket loaded with cyclical and financial shares will most likely accompany a rise in both inflation expectations and bond yields and there are no signs of either yet. Inflation swaps in Europe, the U.S. and U.K. — gauges of price expectations — remain below pre-coronavirus levels. Arguments that unprecedented fiscal support can help boost cyclical shares tend to gloss over the fact that it is just making up for lost demand, making life support a better analogy than stimulus. And central banks have all but guaranteed interest rates will remain low for the foreseeable future, capping any rise in bond yields. The value share revival has seen more false dawns than an Icelandic fisherman and cheap stocks were likely due some sort of rebound, having fallen to their largest valuation discount to global benchmarks since at least 2001. And amid warnings the rally is looking stretched, a rotation makes sense — it's a form of profit-taking and risk management that keeps a fund manager fully invested, addressing both the fear of missing out and career risk. The last significant value renaissance came in 2018 and presaged an epic slump in the broader market. History won't necessarily repeat but the current value bump lacks the fundamentals to be sustained and is likely just another sign the global equity rebound is looking exhausted.  Cormac Mullen is a cross-asset reporter and editor for Bloomberg News in Tokyo. Like Bloomberg's Five Things? Subscribe for unlimited access to trusted, data-based journalism in 120 countries around the world and gain expert analysis from exclusive daily newsletters, The Bloomberg Open and The Bloomberg Close. | 
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