Transcripts For BLOOMBERG Bloomberg Markets European Open 20240713

The bloomberg terminal. Reopening in america, President Trump urges the u. S. To get going again, even if it leads to more death. Chinas ambassador to washington calls for an end to the blame game over the coronavirus origin. More pain for europes banks. Lenders try to estimate the damage to their Balance Sheets from the coronavirus shutdown, and the ecb stands by its inflation mandate after a German Court Ruling on its qe program. Bond investors expressed concern about the Central Banks latest ofonavirus stimulus in light that decision. We are under an hour away to the start of cash trading across the continent, and in Great Britain, lets look at futures this morning, pointing slightly lower after a decent rally yesterday, although it was a rough start to the week for European Equity indexes. We are looking at drops of about. 1 right now on the dax futures in frankfurt. Higher in thedge cash trade yesterday. We are seeing futures edge higher once again today, so. 6 gain across the s p, dow, and nasdaq futures. Lets get your first word news today. Here are your top stories from the bloomberg terminal. President trump pushing to get the u. S. Economy reopen. He says americans should begin returning to their everyday lives, but he is also acknowledging it could lead to even more suffering, including more deaths. Are not going to accept it. They will not accept it, and they should not accept it. We have a great country. We cannot keep it close. Ive had doctors say why dont we close it for a couple of years . This is the United States of america. Yes, will some people be affected . Yes. Will some people be affected badly . Yes, but we have to get our country open and open soon. Matt the European Central bank is defiant in the face of a European Central court ruling criticizing its Bond Buying Program, saying that it is overreach. The ecb is pledging to continue doing everything necessary to revive inflation. In a statement, the bank also noted europes top Court Previously said its Quantitative Easing Program is legal. In the u. K. , the death toll has topped italy in terms of people dying from the coronavirus, Great Britain the worstcase country in europe. The grim milestone adds pressure on the government, which is facing criticism for his handling of the pandemic. It comes as a nations start easing lockdowns. And the British Chamber of says businesses could reopen in days with Small Businesses being the first to get back on their feet. Disney has taken a 1. 4 billion hit from coronavirus, and the worst could be yet to come. Earnings plunged more than half in the quarter. Rose driven by the assets from fox entertainment last year. The giants parks and other businesses are being pummeled particularly hard, but one bright spot is disney seeing a recovery in china. Global news 24 hours a day on air and quicktake on bloomberg powered by 2700 journalists and analysts been more than 100 20 countries. Anna kalinskaya to some breaking news. We want to bring everyone up to speed with the latest developments. We have german march factory orders. German march factory orders dropping by 16. 6 month on month. The estimate had been for a 10 decline, so compared to the previous month, that is a substantial drop, and it is weaker than the estimate had been. We will look for reaction in the german assets, too. Lets get a broader perspective on what is going on on markets. Chinese markets after an. Xtended break saw muted moves emerging Market Strategist simon flynn joins us. You, do you see this as something that will lead to market stress but not necessarily lead markets to boil over . Why do you manage to keep your fears and check . Its a good question. I think first of all, you can see with the way the chinese handled the renminbi fix today that they have no interest in allowing significant depreciation. They believe this would risk and intention in their relationship. We have seen them act with as weint, and that was expected. In addition on the others, of course we are concerned about provocation from the u. S. , but we saw with respect the last kind of tariffs that that in the event you have very negative feedback from financial markets, that u. S. Stocks dropped significantly, then you see trumbulls tone shifting to become more accommodative. For those reasons, you can see the crisis as naturally selflimiting. Matt how has the hit and in the emerging markets healthwise in terms of the coronavirus as opposed to the developed world . It seems to me that the worst socalledies are first world countries. The u. S. , u. K. , italy, spain. What does it look like for emerging markets . Risk that some of the superior outcomes so far in emerging markets are simply because of lack of testing and int the testing rates indonesia and india are a mere fraction of what you would see in the developed world. Ofyou see the stepping up testing, you also see the case rate tending to grow relatively rapidly. You are seeing the highest rate of Coronavirus Infection growth, so i think you can be a little bit concerned in that respect. Also, emerging markets are mostly less capable of dealing with the situation because they have considerably weaker health systems, and also it is much harder for people to exercise social distancing. If you have to go to work every day to make sure there is food on the table, as is the case with a large proportion of people in emerging markets, it is much harder, i think, to execute a successful lockdown. Anna indeed. I want to ask about decoupling between china and the u. S. We are watching continued exchanges of words between the u. S. And china, the Chinese Ambassador to the u. S. Morning about decoupling. We do have very interlinked economies despite trade tensions between the u. S. And china. If trade tensions managed to do youe these economies, think this virus might . It certainly could exacerbate the problem. Even if this is not just because of Political Tension obviously, the political problems,adds more but even economically, you might see firms that have relatively becauseted supply lines of the risk of repeated interruptions and trade or interaction in general, we might find comfort trying to focus production and supply lines in respective countries, so within north america and within china, and that in itself will add to the kind of global decoupling that youre talking about. The dollar seen obviously strengthen throughout this crisis. Right now, we are looking at the bloomberg dollar index. How bad is this for emerging that haventries dollardenominated debt, and which are the hardest hit . Question. Good this is a less severe problem than it was maybe 10 years ago. Mostally speaking, emerging markets have less u. S. Dollar denominated debt than they did in the past. In addition, youve obviously got extremely low Interest Rates in the u. S. As a consequence, most emerging markets have been able to interesty cutting rates significantly. Even in parts of southeast asia, most notably indonesia, you had an experiment with debt monetization, which you would have thought was unthinkable many years ago. Strong dollars obviously problematic for emerging markets, it is problematic to a much lesser degree than it would have been a or even further ago. Anna thanks for joining us. You want to get involved in the conversation around geoPolitical Tensions, how important is trade peace or assets . Coming up, we will talk about what has been going on in tomany and the ecb response a German Court Ruling criticizing its longstanding Bond Buying Program by pledging to continue doing everything necessary to revise inflation. We will discuss this next. Matt welcome back to Bloomberg Markets. This is the european open. We are just over 45 minutes away from the start of cash Equities Trading across europe, and in the u. K. , you can see futures are pointing slightly lower. Lets get to the Bloomberg Business flash, your top corporate stories from the bloomberg terminal. A 2. 7dit has posted billion euro loss. Provisions related to the coronavirus are adding to the paying. The lenders Main Business was resilient in the quarter. Unicredit was the first big European Bank to try to quantify the pandemic impact. Euros aside 900 million for bad loans last month. Otherordisk is joining drugmakers and reporting surging sales as patients snapped up diabetes medications ahead of coronavirus lockdown. Sales rose 16 for the first quarter. It is maintaining its 2020 forecast showing it expects to withstand any hit from the coronavirus. Theick airport is bearing brunt of airline cutbacks in the united kingdom. Virgin atlantic is the latest carrier to back away from the u. K. s second busiest hub. It says it will shut operations there, at least number rarely. British is looking at doing the , and Norwegian Air shuttle is fighting for bailout to release some of its heavy debt pile. That is your Bloomberg Business flash. Anna the ecb has responded to a German Court Ruling criticizing its longstanding Bond Buying Program by pledging to continue doing everything necessary to revise inflation. It took note of the judgment but pointedly remarked that the European Court had previously said that qe is legal. Of International Wealth management and global head of Economic Research at Credit Suisse joins us now. Great to speak to you. Really interesting to talk to talk about the super trends in. We wanted to start with reaction about what weve heard in ajc and ecbt the responding. Other questions thrown up by this ruling today . Generally speaking on the german side, there has always been respect for quantitative easing is a monetary policy. Even before coming to the questions pertaining to independence of monetary policy, there is suspicion around this particular tool, the andortionality of it keeping it in some way under control. Matt how concerning is this ruling . You ran you started out as a swiss income. You are obviously familiar with this market. If german courts are ruling the ecb reached too far with its q. Week, that was limited. That was capped at 33 of issuance. What they are doing with the program right now is much more a bazooka, much more unlimited. Is this a worry for the fixed income market . I think in the short term, it seems the ecb is absolutely clear for the next three months to continue with its purchases. Is probably seeing more of the uncertainty this is introducing the medium term. I think it is well respected and how sovereign credit spreads over germany, for example, have moved out on the back of the coming to fixed income markets, i think the intermediary step is how the isope how the euro reacting. We know from the times of the european debt crisis that italian credit spreads tend to correlate quite closely with ift the euro is doing, and you take that even more against closeiss franc, also very correlation and how credit spreads are influencing Market Expectations about the euro and the political risk. Then, of course, comes the on Interest Rates in markets such as switzerland which are regarded as an emblem on the pressure is there on the fors franc and indirectly the swiss franc to remain low and beat under continued pressure lower. Anna we have manufacturing more than theg estimate, underscoring the weakness we would expect to see in germany. We then get pmi data for services for spain and italy, projectioneems to be from some economists we might get singledigit readings. What lens should we look at this data through . How much should it matter given our fairly low expectations for what you can see in an economy that is under lockdown . Theres a couple of considerations to have. Orders are a data series that is very volatile, and for sure, the data this morning have underwhelmed the consensus, which was already pretty negative, but equally, these are the type of data that can rebound very sharply, so i think that the market is able to look through one data point that is particularly bad, and we know it isnth of march, if sentiment data or leading indicators such as orders, and also, of course, then industrial production, all of that is going to be really very dark. For the month of march, probably april is going to be equally bad. Then we might see a trough in the month of may. , data outry important of germany is how data on the trade front is continuing to evolve, and the whole Recovery Market hasthe equity been pricing in over the last five weeks, looking through those coincidental bad economic , means the market would to not see tensions that are particularly relevant to the German Economy because it is what intimately tied to the Business Cycle in china is doing. Certainly it has become more correlated with china. Matt i want to get to break quickly because we still want to come back and do your super trend. We want to talk about millennial values. Thats one of them. I wont spoil it, but i will point to those in that generation or those suspicious of that generation, and also anxious societies. Stay with us for a look at netnet nanettes super trends. This is bloomberg. Having adit suisse is rethink. Analyst at the bank have updated their investment trades against the backdrop of the pandemic and come up with a series of socalled super trends to watch Going Forward. One of the super trends you have mentioned is anxious societies. You are not talking about people who are worried about getting the coronavirus, right . Mean the anxiety has, of course, been now added through this whole episode, and anxiety about health has just added on top of a number of other very important considerations that were there even before that. The access to jobs in a fastmoving work takes trends and how a workforce can keep up with the ofnges of skills is only one andlongterm examples anxieties. We can certainly look through surveys that are showing that safety and personal security have been a longstanding concern of many citizens around the world. All of that is being brought to a point where there is a real toking toward solutions these points of pain. Anna that is one of the things dat you identify along with economizing the silver market. Thank you for joining us. These days staying connected is more important than ever. So were working 24 7 to maintain a reliable network, to meet your growing internet needs. Were helping customers who are experiencing Financial Difficulties stay connected. Were increasing internet speeds for low income families in our internet essentials program. And delivering selfinstall kits to your door. Nos comprometemos a mantenerte conectado. Were committed to keeping you connected. For more information on how you can stay connected, visit xfinity. Com prepare. Matt welcome back to Bloomberg Markets. This is the european open. See ftse futures are actually rising right now as continental futures are down just slightly, really very little change there. Joined its german peers and cutting guidance as a result of the coronavirus pandemic. The carmaker says it sees and earnings before interest and taxes margin of 0. 3 . They warned that the deepest slump will be in the Second Quarter and crucially, bmw said its new outlook does not reflect the threat of a longer recession in major markets, nor an extended slowdown in china. Joining us to discuss is our senior european autos expert. Are we to take from this that even this profit morning is still based on a pretty rosy scenario . Good morning. Yes, i think so. There was a glimmer of hope that guidance, given that it was last to report its outlook, given that the margin guidance was pretty much on the low side. That did not happen. The positive is that they have maintained some sort of guidance. They said the Automotive Division will remain profitable this year, but this is with the caveat that they do not expect a prolonged recession and therefore, guidance could be revised down at a later point. There could be revisions. Good morning to you. This is a sector your cfa heart of tensions coronavirus because it is difficult to sell cars and also difficult to produce cars in this environment. Heard anything that gives us any certainty about when production comes back, when they feel able to allow people into stores, any visibility at all . Many companies have already started production in europe, but of course, many of the dealerships were closed. With results a couple of weeks ago that they were in no rush to reopen production until there were customers out there. Many factories reopened by the end of february in china, yet even now, they are still not up to precovid production levels. The biggest player in china last week sent it does not expect sales to be back to normal levels until july. Matt what kind of stimulus should we be expecting for this market . Obviously, it is very fragmented, but Angela Merkel yesterday in a Conference Call with the ceos of german carmakers held off on any kind of cash for clunkers stimulus. What do you expect out of germany . What do you expect out of china . Anything coming out of the u. S. . The companies themselves hope there will be stimulus, and i think that is what they are expecting in the second half. In terms of individual countries, theres a huge amount of stimulus already being put into the economy, so i think it might be a wait and see. There will be some pentup , so this will aid sales certainly in the third quarter. I think at that point, individual countries will take a decision. Germany seems more likely place, especially as they have a huge amount of diesel still on the road in the car park. Any sense of how this virus and what we see in response to it will change demand longerterm in the auto sector . Its one thing charting a path back to where you were, but if you think you will never get back to where you were, the world might look different, and that could be in a positive or negative sense. On the one hand, this is a sector that has faced headwind around regulations on climate hand, but on the other when the economy takes a turn, maybe theres more demand for cars. We have seen bmw and mercedes shed mobility service, being shut down in the likes of london and some european cities. That is one aspect of Automotive Companies business that will have a shortterm negative impact. In terms of mediumterm demand, we entered this crisis with sales expectations already on the low side. China was down 9 last year. The u. S. Was already softening, and europe was down 17 , so we were already into the crisis, and this is going to impact any recovery Going Forward. I do accept people will use their cars more given that they are reluctant to go on public i dont think people will immediately want to replace their cars, given the economic reality of a recession and higher unemployment. Matt thank you very much for joining us. Anna Bloomberg Intelligence senior european auto analyst. Has hitd19 pandemic the Music Industry hard. We know many artists have been broadcasting from their homes. Bloomberg has an exclusive interview about how the crisis streaming platforms. The crazy thing for us is how global the business is. We are in close to 80 countries around the world, so we are dealing with all these various stages of the pandemic. It have asia, making in your recovery. You have europe right in the epicenter. You have the u. S. , which is kind of right now in the middle of we willenter, and probably enter the epicenter shortly, so we are all in different stages of this pandemic. What is fascinating for me has the just seeing how Consumption Habits have shifted overnight. I dont think we have ever seen anything like this since the companies, ofhe how people have change habits, changed what they are listening to, how they are engaging with that content, so it has been really responding to this new reality that we are living in while at the same time making it culturally appropriate. Users,have 283 million 130 million paying subscribers and 79 markets. How do you expect listening to shift over the next few months . We have seen an influx of new users coming to the service, which we are very happy about, old users returning to the platform. My guest will be as good as anyones about when this will change and how quickly things can turn back into normal. For us specifically, the big around returning users, to the point where is really on continue to use. To the point where people are starting to return to their offices, their place of work, i suspect we will see something that looks a lot more like normalcy for us. The second thing for us is just the gym. People are listening to music while working out. Again, people are working out but not going to the gym so much, so that is impacting the type of music people are istening to as well, so suspect we are seeing places of work opening up and jims opening up. I think we as a company will be a lot more like normal again. This has really been hard on the Music Industry. I know there have not been any live concerts. Artists doing home concerts. How hard do you think the Music Industry itself will be hit by this . To beis absolutely going massive, specifically for artists themselves. If you look at an average artist today, about 80 of their income comes from touring. The fact that they cannot tour and likely will not be able to for much of the summer, which is one of the greatest points for concerts as well, will impact many musicians, and not just that, but we are talking about all the roadies and everyone else that makes these concerts happen, so it is a big, big thing. It is something that we as a company are very focused on and why we also created the covid19 relief fund, where we want to match donations towards the Music Industry. Ceo that was spotifys talking with emily chang. Up next, another day, another slew of loan loss. We break down earnings as the harshness of the banking environment becomes more apparent. This is bloomberg. Matt welcome back to Bloomberg Markets. This is the european open. We are just about 17 minutes away from the start of cash trading, and we have very little change in terms of futures, so we are not getting a lot of direction for the market open this morning. We can give you bloombergs first word news. Todays top stories from the bloomberg terminal right now. President trump is pushing to get the u. S. Economy reopened quickly. He says americans should begin returning to their everyday lives, but he is acknowledging it could lead to even more suffering even a lot more suffering. The people are not going to accept it. They wont accept it, and they should not accept it. We have a great country. We cannot keep it close. Ive had doctors say why dont we close it for a couple of years. This is the United States of america. Yes, will some people be affected . Yes. Will some people be affected badly . Yes, but we have to get our country open and we have to get it open soon. Matt i tv is suffering a double whammy with some of its hit shows on hold and add revenues slumping. The company says it will not give guidance for the Second Quarter given the uncertainty caused by the pandemic. I tv is also canceling its 2019 dividend to conserve cash. One good side is that online viewing jumped 75 in the first quarter. Global news 24 hours a day on powered bycktake 2700 journalists and analysts and more than 120 countries. Anna Bank Earnings have continued to come through this morning. Unicredit posted its second loss in a row with loanloss provisions climbing to 1. 20 6 billion euros. Our Bloomberg Intelligence senior banks analyst joins us now. That slump will not be much of a surprise. Everyone knows how difficult it will be to get all these Bank Customers to the other side of this pandemic without losing any, essentially, so what have we learned so far through this burning season . Yes, morning. Clearly, the big unknown remains what is the ultimate cost of risk going to be because of this . They got into basically a higher provision than the one they have taken. Look at bmp yesterday. They gave guidance this year for profit miles ahead of consensus. Consensus has been cut and long way, so the thing we have learned is companies are not all position to give guidance and bnp is really the only one that has given quite strong guidance. Revenue pain, we do not know how bad it is yet, but we are beginning to see the rate cuts, but on the flipside of that, banks are starting to tell us, weve got the enormous governmentsponsored programs in place, so dont take an ax to. Ur numbers the feds are recalling 40odd percent from this years highs,ut most results so far actually stocks have been up reasonably well, 3 or 4 . Matt i was just going to ask about the Market Reaction here. As you say, weve seen a 40 600ly 45 drop on the stoxx bank index. How much do analysts care about the numbers we are seeing right now in terms of selling the stock off further, or is everything priced in, at least for this quarter . I think the issue is next year. At where numbers are for this year, and i think that probably captures most of the worst case scenario, but next year, numbers have not moved much. The unknowns are things like loan growth. We know the world has ground to a halt, but we are seeing 5 , 6 , 7 loan growth, and that could continue for several quarters. What analysts are struggling with is how much we cut numbers by and also, the ecb has effectively differed some of its pain, trying to make it easier to join in with the economy, so how much of the cost of the rest of provision charges should we put in next year versus this year, etc. The one thing in the moving parts so far has been capital, and virtually every bank has missed on that, and that does not really matter. There saying that the regulators are giving them Carte Blanche and all they are doing is making sure they have enough headroom that they can pay. I think it is a reasonably solid set of numbers, all things considered, but the big question still remains how do we face and the lost cause for the lending, and how much can banks actually cut costs this year because it is a little bit socially unacceptable. Bankshow much do you see playing the role that governments expect them to play during this crisis . Governments in europe expect them to support is in is is here , and they have put a lot of money behind that, governments have, but we saw banks being too slow in the eyes of the government and many businesses in the u. K. , until those loans were 100 backed by the government. Have we been expecting too much from the Banking Sector . Can it do what it is being asked to do . They have been sort of unshackled capitalwise. I happened to look should they happen to look great so far. I think we will see the banks in europe taking a loss and make a virtue of the fact that last time there were the bank eyes, but actually, this time they are using the funding and lending to the economy. If you look at the sort of 18month outlook, that could potentially mean revenue next year is not as bad as people think. There could be some positive isprises, and also, it trading on 6, 7 times at the moment, but it could rerate at some point because they have done the right thing as well. Great to get your take on this. Bloomberg intelligence senior analyst. You can get more from our Bloomberg Intelligence team on your bloomberg terminal. You get a big overview of the entire Bloomberg Intelligence universe. We are minutes away from the open, almost 10 minutes away from the open. We are going to run through some of your familiar stocks to watch warningg i tv, advertising demand has dropped by more than 40 over the last month. This is bloomberg. Anna welcome back to the European Market open. Ther 10 minutes ago until start of the European Equity trading day. We have had a host of corporate reporting this morning. Theres a lot to choose from this morning. Dani burger joins us with some analysis. Lets get into Food Retailers first. Whats the story . Dani it is the changing nature of how we shop now, ordering and groceries. There are seeing massive growth. Not just that, but also stockpiling. Porters are still at a high. According to analyst at morgan stanley, they say its good that some of these are starting to normalize. Overall, Second Quarter retail growth is over 40 . With itat is the story v . Advertising sales just dropped through the floor. Dani right. Total your advertising growth down 9 . Of course, companies do not have as much cash on hand which means their Marketing Budgets have been thrashed. It is contending with that and because of that, they say they are not giving a forecast for this Current Quarter or for the entirety of the year. It is a double whammy for itv. Also recall yesterday they said of theirdelaying one big ratings bonanza shows. It is especially going to hurt them in terms of ad spending for the rest of the year. Also planning on making cuts and trying to cope with this thing, that they are going to cut about 60 Million Pounds worth of spending this year. Anna im sure some tears were shed somewhere about that one. Lets talk about what is going on with the insulin maker. They say they entered the virus with something they had to sort of declare in their numbers. Drugstainly stockpiling helped them out a huge amount. They saw sales rise in the quarter. The question is when your patients have stockpiled, what is to come . They will certainly face pressure Going Forward. They have increased pressure on their diabetes medicine, not to mention the fact that because we have social distancing, the company says it will be more difficult to onboard new patients. However, they are actually keeping their 2020 guidance. They say a 3 to 6 sales growth positive signa there able to give a forecast. That has analysts excited. Matt thanks very much. Some of your stocks to watch. Coming up, futures are telling us a heck of a lot about direction or the size of the moves. We might see a pretty tepid open this morning. A number of futures contracts unchanged right now. Nonetheless, trading will start. This is bloomberg. A minute to go until the start of equity trading. Here are your headlights. Reopening america. President trump urges the u. S. To get going again, even if it means some more casualties. Chinas ambassador to washington calls for an end to the blame game over coronavirus. More pain for europes banks. Unicredit reports its second loss in a row and credit agricoles provisions surge. The ecb stands by its inflation mandate after a German Court Ruling on its qe program. Bond investors expressed concern about the Central Banks lay just latest coronavirus stimulus. Matt we have not seen a lot of movement in futures this morning. In fact, a lot of equity futures index contracts were all, lot movement at except relatively tepid open this morning. It could be fairly slow, certainly will be for the dax. The ftse, you can see and by the way, if none of these numbers move by more than 0. 1 , you are going to see them staying great. They dont really turn red or green until you get Real Movement and possibly some volume as well. But you are seeing basically unchanged European Markets right now, with a little bit of a slant to the downside, as the ibex falls. Maria tadeo has told us there is in spain todayte so investors may be waiting to see if spain is able to stay in a state of emergency and keep Central Control or if it all falls apart. So with that, i will tell you that Angela Merkel and germanys 16 Regional State premieres me today to hash out a plan for their gradual reopening of europes largest economy. We have already got Stores Opened up. For some reason, they decided that as long as they are smaller than 800 square meters, they can open up, which, to me, does not make a lot of sense. It is on its way everywhere. Joining us now is gregory perdon. Cocio at Arbuthnot Latham thanks for joining us. Glad you are safe and healthy. What do you think about the reopening of economies . It is possible in spain. We are seeing it happening in germany. Donald trump is pushing for it in the u. S. Seems like governments are trying to get things back to normal. Gregory good morning, matt. I do think that is the direction of travel. I am focusing less on the corona curve, where its flat or peeking or where we stand in terms of infection rates. Im focusing more on the unemployment story. Thats probably the number one thing i am focusing on acrosstheboard. I think a lot of market him pants are under underestimating what this will do to the u. S. Economy. I am not a huge subscriber to the vshaped recovery. Ultimately, we wont know when we actually see that happen. What i have focused my energy on is trying to determine whether seekers willyment be persistent or not. Conclusion soyour far . Because you can see that some jobs could be created as quickly as they were last if certain businesses are allowed to reopen. But a lot, i guess, might depend on consumers and societies willingness to go out and societys willingness to go out and experience services under very changed conditions. Gregory i would look at the American Experience as different from the european experience. The european experience, they have a social safety net in place, where the americans dont. The overarching concept i am focusing on is, when those paychecks go out to the people that not in their jobs at the minute, i asked myself, are they really going to spend money . Yes or no . Even those that do have jobs, are they going to go out and spend money in the short term . The answer is probably not. Governments in the past have issued free money to their citizens. For example, japan did it back in the Global Financial crisis. Im not so convinced that handing money to citizens is necessarily going to be the panacea. Matt is it even going to be possible Going Forward . Ruling,e german court is this European Central bank going to have a problem continuing to give out money . Gregory you are spot on to point that out. Response to the ruling yesterday in germany was very bifurcated. Some were shrugging it off a little bit, but then you had the Legal Community saying it was a declaration of war. Ask for meve done is to conduct an assessment and handed over. The deeper issue is, who will have a say . The National Courts or the overarching eu courts . My gut feeling tells me that any period of crisis, they hundred pound gorilla the 800 pound gorilla, the ecb, will win on this one. My bet is on the ecb. Gregory, what are your thoughts on the extent of support we have seen from governments in developed markets . And what that does to capitalist or mixed economy models into the future . Just to sort of kickstart that analysis, will it be heavy support from governments that kind of saves capitalism . With very sit different looking economies in the future . Gregory i mean, its hard to say. Whats clear to me is that we are not coming off of the trip anytime soon. Y would definitely be there will definitely be continued and significant fiscal and monetary stimulus on that side. Its kind of like a tugofwar. Fiscal and monetary stimulus on the one side versus the unemployment on the other. If we are not able to get those employees back to work quickly, the fiscalmonetary wins. Ultimately, fiscalmonetary cannot go on forever. Thats why a lot of people are talking about helicopter money as the next frontier. I think fiscalmonetary wins in the shortterm but on the longterm, unemployment wins on that debate. Anna cocio out of Arbuthnot Latham. Matt was asking about the ecb a moment ago. We will get further thoughts from gregory in a moment. The ecb response to a German Court Ruling criticizing its longstanding bond buying would doy pledging it everything necessary to revive inflation. This is bloomberg. Anna welcome back to Bloomberg Markets european open. Thettle bit of a negative negativity a little bit of negativity creeping in. The dax down by 0. 3 . U. S. Futures point a little higher. Some of that loss we saw at the end of the u. S. Trading day in the early part of todays european session. The coronavirus pandemic has forced the European Union to take a hard look at the regions reliance on Global Supply chains and its broader relationship with china. We discussed at this exclusively with bill hogan, the european trade commission. Take a listen commissioner. Take a listen. In the beginning, there was a lot of crisis management. We have to remove all those restrictions and return to an open, rulesbased approach. Im sure every country will be looking at how they will look at their vulnerabilities and look at how they are vulnerable at this particular time in terms of medicine, medical supplies. And they will want to reassure some of this material and do local production. This is why we need, you know, some rethink in terms of how we should do in terms of working together. I have been reaching out to the United States, wto members to see how we Work Together to have a speedy recovery than perhaps if we were working individually. So you have been talking to i would assume ambassador lighthizer in the United States. To trythe key jobs was to put the 2018 deal that Jeanclaude Juncker negotiated back on track. What is the conversation you are having with washington right now . That iable to making is it amicable to making that amiable to making that happen . Clearly over the last few weeks, people have been concentrating on trying to do with saving peoples lives, both in the European Union and United States. We are expecting in the next few weeks to get back on track. The mandate that we have in the European Union is to negotiate with the American Administration based on the 2018 mandate that still exist. We have been making mandate and that still exists. We have been making some progress. Hopefully we will make more progress in the coming weeks. You have visited d. C. Several times during that time. One of the sticking points at the time was agriculture. The u. S. Wanted the eu to put agriculture on the table. That was firmly off limits. Is it on the table . I think both of the European Union and the United States are happy to do so. Technology, Energy Issues are on the table. There is a big agenda. I think there is an open mind and make some open minded spirit to try and make some agreement here. I am very happy with the constructive engagement we have had in the early months of this year. I have invested a lot and tried to refresh the relationship with the United States and ambassador lighthizer and i are certainly having a constructive relationship at mom. You talked about at the moment. You talked about vulnerabilities and supply chains. How can you have a less globalized Global Economy and at the same time cooperate with the United States and various European Countries to have a speedier recovery . I suppose it europe is looking at what we call strategic economy. Rulesbasedpen, approach, fair competition and fair rules that can be implemented by the wto. We have a lot of partners. We want to do more of them. At the same time, there are vulnerable sectors that we have seen exposed during this pandemic, particularly in the health area. Equally, the production of medical supplies that are important and essential for citizens. I think both of the European Union and United States see this issue now, that you cannot just depend on one geographic location in the world and we have to diversify. We are going to do that, so is the United States. That does not mean we cannot do both. With the vulnerable sectors that we were dependent on in the context of a pandemic and crisis, but equally, we have to have an open, rulesbased approach for the entire economy. Matt that was phil hogan, the european trade commission. The ecb commissioner. The ecb has responded to a German Court Ruling by criticizing its longstanding Bond Buying Program by pledging it continue to do everything necessary to revive inflation. The banks governing council took note of the judgment but pointedly remarked that the top European Court has previously said that quantitative easing is legal. Gregory perdon, cocio of Arbuthnot Latham, is still with us. We talk about the ecb issue already. I want to get back to phil hogan and his push for, you know, a trade free world during this recovery. Brexit aoing to make little bit easier for boris and the u. K. . Is it going to be easier to get a strong, freetrade deal because of the Coronavirus Crisis . Gregory i mean, i think its difficult to say right now in terms of the brexit situation. It has really taken the backstage, so to speak, as everyone has turned their attention to the health scare and quantitative easing and fiscal stimulus. So i would suspect that, you know, all hands on deck from the u. K. Government, in terms of focusing on making sure that the local economies are functioning. I wouldnt be surprised if we really u. K. Government spend its boards on trying to stabilize the u. K. Economy, as opposed to, you know, looking further ashore, if you follow me. Anna i just want to bring you some breaking news just across the bloomberg. The Spanish April Services pmi number falling to 7. 1 the forecast was for 10. The composite number has fallen to 9. 2. The forecast was 10. 5. The difference between 9. 5 and 10. 5 probably doesnt matter but the fact that we are down to Single Digits on some of these pmi numbers. The fact that manufacturing is also very weak, not just these close down Services Sector that we see across europe. On the one level, we are not surprised. If you deliberately shut down and economy, youre not going to sell many services, are you . What lens should we look at this dire data through . Anna,y i mean, you know, i think that the market is not going to be surprised that we are going to see some horrific data over the course of the next few months. If you just look at philip lanes comments that were made yesterday or the day before that it could take three years to recover, which is pretty bearish. From an investment perspective, i think we are in a bear market going to be very difficult, i think, for equity markets to continue to power ahead in light of the fact that, from an economic perspective, i dont see this as a bottoming out. Valuations in some of the hot sectors remain elevated. To that reason, if you want a view of what a Portfolio Manager is doing in this particular environment, we are taking this opportunity to reduce our equity risk and increase exposure to investmentgrade Corporate Credit. Thats what we are doing on the ground. Matt so Corporate Credit you think is the way to go right now . Investmentgrade Corporate Credit going to stay that way at that grade . Our thinking on that is that there is probably not a lot of money to be made in investmentgrade, but it does provide a positive carry in the a coupon and secondly, there is the tailwinds of central bank buying. On, perhaps in a few months or six or nine months, we can go back into equity markets when things start to stabilize from a Health Perspective and hopefully from an employment perspective. It is a twopronged approach, if you follow me. Anna thanks very much. Thanks for joining us today. Gregory perdon, the cocio at Arbuthnot Latham, joining us here on Bloomberg Markets european open. Gregory will be continuing his conversation on Bloomberg Radio at 9 00 a. M. U. K. Time. President trump says the u. S. Must reopen, even if it leads to more suffering. Up next, we are live from new york with the latest on the u. S. Response. This is bloomberg. Anna welcome back to Bloomberg Markets european open. We do see a little bit of upside on the london market, but elsewhere in europe, little bit below that flatline. U. S. Futures point to the upside. Lets talk about what is happening in the u. S. And the fight against the coronavirus. President donald the u. S. Must begin to open reopen immediately, even if it leads to more infections. Speaking in arizona, he said he is preparing for the phase two of the u. S. Response to the coronavirus. President trump the people arent going to excepted, they want accepted, and they shouldnt accept it. We have a great country. Ive had doctors say, why dont we close it for a couple of years . This is the United States of america. Will some people be affected . Yes. Will some people be affected badly . Yes. But we have to get our country open and we have to get it open soon. Anna joining us now from new york is Annmarie Hordern with the latest on what is happening in the u. S. The white house is considering disbanding the Coronavirus Task force. What do we take from that . This may be a task force that has not always seen eye to eye with the president. This is part of president Donald Trumps and the administrations plan for phase two of reopening the economy. Dissolving the task force would on, dr. Solving those anthony fauci, dr. Birx. Mike pence also speaking about this. We could potentially see that task force shelved as early as the end of this month. This could potentially there could potentially be a lot of criticism about this. Public Health Officials have been warning about a second wave if lockdown measures end too quickly. Governor andrew cuomo was talking about how you cannot prematurely do this. He pointed to new data from the university of washington, which has a new forecast saying an increase of more than 130,000 deaths by august. Originally, they had 60,000. The question remains to be seen whether americans are even comfortable with life going back to normal. At least 70 are somewhat or very worried about getting the coronavirus. Matt what is the latest on the pharmaceutical front . Gilead is looking to expand manufacturing. There are a number of drugmakers bringing either treatments or vaccines to testing. It is a race for the drugmakers and not just for those that will help patients recover, but also the vaccine. Gilead talking about the fact that they want to develop this consortium of companies to ramp up this expansion in europe, asia, and the developing world. Pfizer actually starting to test some of these u. S. Patients. Er, johnson johnson, a number of these are in a race to really bring that vaccine and shelve that timing of a year to 8 months. Matt Annmarie Hordern talking to us about whats going on in the u. S. And the pharmaceutical front. As britain prepares to lift its lockdown, how does the chancellor wean workers off of Government Support . Adamll speak to the bccs marshall. Thats the British Chamber of commerce. This is bloomberg. Anna welcome back to Bloomberg Markets european open. 30 minutes into wednesdays trading day and things negative for the European Equity markets, but not by a great deal. A bit of upside coming through on the ftse 100. The cac index a little bit ax a little bit d negative. The gainers, health care, food and beverage, and insurance. Lets look at the downside. Ax a little bit negative. The biggest losing sectors this morning, oil and gas, travel and leisure, and autos. We talked about the numbers coming through from the auto sector with those bmw numbers earlier on and a focus on oil prices. We have saw a big rally in oil prices yesterday. Matt, lets get up to date with the top stories. Matt german factory orders right up there. They just broke this morning. Demand, of course, collapsed in march, as measures to contain the coronavirus brought the economy to a standstill. It is europes manufacturing powerhouse. Germany has been particularly affected by factory closures and supply chain disruptions. A decision from the federal government on support for the industry has been postponed until june. That was the phone call with the carmakers yesterday. President donald trump is pushing to get the u. S. Economy to reopen. He says americans are should begin returning to their everyday lives, but he is also big knowledge and that it could lead to even more suffering, even very bad suffering. Pres. Trump they want accept it and they shouldnt accept it. We have a great country. We cant keep it closed. Ive had doctors say, why cant we close it for a couple of years . This is the United States of america. Will some people be affected . Yes. Will some people be affected badly . Yes. But we have to get our country open and we have to get it open soon. Matt the European Central bank defiant in the face of a German Court Ruling criticizing its Bond Buying Program. It is pledging to do everything necessary to revive inflation. In a statement, the ecb also noted that europes top Court Previously said its qe program was legal. The german judges are giving the central bank three months to prove its Asset Purchase Program is aligned with the law or make changes is in line with the law or make changes. 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. Anna . Lets talk about whats going on in the u. K. The coronavirus lockdown, when it struck britain, the chancellor unleashed an unprecedented wave of spending to help millions of workers stay at home. As the country plans to lift restrictions, his next challenge will be moving them off Government Support and back into their jobs. If he asked too quickly, businesses short of money may have to lay off staff. If he is too slow, the huge costs may keep piling up. Joining us now is adam marshall, director general of the British Chambers of commerce. Really good to speak to you. I know you have more research out from your members, which is interesting. I just want to ask about the furloughing scheme and the other schemes you have been using. If the chancellor is thinking about how to wean the u. K. Economy off these, over what time horizon and what steepness of cliff edge, if you like . What should he be bearing in mind . What are your members asking for . Adam the first thing that businesses across the u. K. Are saying is that there absolutely cannot be a cliff edge. Our research is showing that about three quarters of businesses are making some use of the furlough scheme. That is an absolutely staggering number. Those firms are going to need to have some access to for some time to come. Not every business is going to be able to reopen at the same pace. Not every sector is going to be able to move ahead as quickly as others. We are going to need to see that furlough scheme continue and become more flexible over time to support business is getting people back to work safely. Matt what about businesses that face a decision for example, i am thinking about a lot of restaurants, adam, but i am sure there are others, where due to social distancing, even if they did reopen, they would just lose money. How many businesses out there do you think will stay close to because they cannot afford to reopen . Adam there are a huge number of businesses out there, particularly business to consumer firms who are facing significant reopening challenges. The Retail Sector is one where you will find a number of firms like that. As you mentioned, hospitality, also leisure and tourism. It is very likely to be the case in the u. K. And many other countries around the world that those sectors may require continued support for a longer time. We caution against are just breaking it down by sector we caution against just breaking it down by sector. You could see entire supply chains collapse. There is going to be a need for generalized support for employment in some form for some time to come yet. Anna thats interesting. I mean, getting into sectors would seem like one way to make the current level of support a little more sophisticated. But as you say, the broad approach would be necessary in the very first phase of this. The chancellor seems concerned about what this is costing. There are some arguments for doing that, are there arent there . Adam there are certainly arguments for tapering the support. Everybody in business and government realizes that over the longterm, you cannot sustain this level of expenditure. I have great sympathy with the chancellor on that point. Rather than go down eight sectoral approach, a lot of businesses are telling us it would be more helpful if you can have parttime more shortterm working, so bringing people back perhaps 50 of the time with some element of support for the time they are not on the job. That sort of system operates in a number of other countries. We have successful workplace income support schemes in countries like the republic of ireland, germany, and elsewhere. Flexiblethat more sort of model may sue a gradual return to work better. Matt so what, you are lobbying the government to try and support a scheme that will make that possible . Adam we are certainly working with at the u. K. Government and trying to say, look, it doesnt work to have a furlough scheme for the longterm where employees are either out of the workplace completely or in work and on the employers p l. You have to get to a point where you can mix the support with the employer starting to pay the wages of these people again. We have to do that gradually. Some businesses will get back to work more quickly. Others will take more time. Anna interesting approach. As a government is drafting its plan for how we get people back to work, back to their workplaces, what are your concerns i understand you are doed with some of that you have safety concerns for business . Adam we are involved in it and the number one concern for businesses across the u. K. Is to keep their people safe. Every single business that we speak to end in every single Business Community that we work in the u. K. , thats why employers tell us over and over employershats what tell us over and over again. If someone gets ill or dies because they attended the workplace, is the employer liable . Thats a huge concern weighing on the minds of many business people. The procurement of personal protective equipment. Will businesses need to have pp . If so ppe . If so, how do we make sure they are not bidding on the market for ppe against Healthcare Services and other services that need to get it first . These are pretty big question since Big Questions about the return to work. Matt i cant tell you how many guests or bloomberg clients have told us or friends have told us they dont see any reason to go back to the office. Their home office set up his fantastic is fantastic. They really like working from home, they get more work done in that environment in so many situations. Do you think there will be permanent changes . Is there any reason for lots of businesses not to simply cancel their leases . Adam i think a lot businesses will make permanent changes off the back of this. The productivity benefits are things that thousands of u. K. Businesses have realized. In a lot of cases, we are seeing businesses make 510 year digital transitions in the space of around five weeks. They arent thinking about the consequences are thinking about the consequences. Many companies are thinking about their fixed cost base and how they can reduce it in the longterm. Yes, i do think we will see change. That will obviously impact property markets in a number of countries, including here in the u. K. But we have to remember, that is a luxury afforded to those businesses, particularly Services Firms where people can work from home, they can work in an agile and flexible way. Thats not possible for all employers. Thats why we think there needs to be support for those people who need to go back to the workplace and that clarity of approach on what Safety Measures businesses are going to need to take. Anna thanks very much for your time this morning. Good to speak to you. Adam marshall, director general of the British Chambers of commerce, speaking to us here on Bloomberg Markets european open. Up next, finding opportunities in fintech. We will speak to a partner at dawn capital about making investments in these very uncertain times. This is bloomberg. Matt welcome back to Bloomberg Markets european open. We are 44 minutes into the trading day and we are seeing red arrows across European Equity indexes. Ftsedrops basically in the , very little change in london. 6 hasn tech startup n2 raised more than 120 oh you dollars in an extension to its 120 funding round million in an extension to its final funding round. This signals some resilience in and fintech markets here, even as established businesses warn of risk and further weakness ahead. For smaller and more noble players, is the crisis nimble players, is the crisis presenting an opportunity to get ahead and how can investors capitalize on this . Lets speak now with evgenia plotnikova. Shes a partner at dawn capital, an early stage vc fund. Software andn b2b Fintech Companies across europe. Lets start with that. , can smallern companies, more nimble Companies Gain an advantage during this crisis . Evgenia hi. Great to be here, guys. Look, absolutely. We are much believe that still very early in terms of this. Environment, we are witnessing that there is still a lot to be done. We see this is very much an opportunity moment for a lot of become completely digital and a lot of startups are on the front of that innovation forefront then ovation of that innovation. Anna in that context, what are the opportunities you are looking at . I suppose a that facilitate Remote Working, thats part of the story i suppose businesses that facilitate Remote Working, thats part of the story . Evgenia Remote Working will likely be the first beneficiary of the current situation. That being said, we do believe that there will be a lot of other opportunities. B2b Software Investors will look for opportunities from other business. We believe that the next interesting wave of innovation is likely to happen in what we call automation at scale. In the current world, where there is an increasing amount of data andinteresting wave of innn is likely to happen in what we applications, the automation of various workflows and even of the Application Development itself to reduce, reduce productivity increase believe that we there will be a lot of ortunities in what we call space. We believe that there is plenty more opportunities, particularly , to emerge as global winners. Matt you have been investing in these kind of technologies, work from home and videoconferencing and fintech since long before this crisis. How did you identify the Threat Threads then, which have accelerated now, and what do you think will be the trends for the future . Evgenia absolutely. The way that will look as a Global Economy, there has been a massive shift broadly to the cloud. We are looking at anything analog. , aboutstill very early 5 10 penetration of the cloud. There is still a lot more to come. We have been witnessing in the past decade that dawn has been backing those startups. We are seeing every single process that used to be in effectively cutting paper, shifting to software. One of the examples is a fantastic example, a Wealth Management platform. Cards, ae a lot of lot of pen and paper. It is now a fully digital platform that works with employees to create what has become the backbone of Cash Management within a business. Again, we have been looking at every analog thank you very much. Thanks for joining us. Evgenia plotnikova, partner at dawn capital. Next on the program, as the u. S. Administration points the finger at china, how important is trade peace for risk assets . That is the question of the day. Laura. Put it to mlivs she joins us next. This is bloomberg. Welcome back to Bloomberg Markets european open. Weve got some breaking news lines coming through on the French April Services pmi, 10. 2. The market was primed for these kind of week numbers from the Service Sector in. Particular lets get to our. In particular. Lets get to our markets alive macro strategist, laura cooper. French apriles services pmi, 10. 2. With was the market ready for that . I think the market was prepared for really dismal data today. We did have already manufacturing pmis earlier in the week coming quite sharply lower. Today, it is expected that yes, this is the largest contraction on record and the pmis are confirming the Economic Activity is collapsing. When you look across the various metrics of business activity, new business, they are all plunging to record lows. Even when we look at forwardlooking indicators, those are also testing low. I think what to take from this currently is just of the fact that, you know, this does provide an indication of the breadth of the shock at hand, but not the depth. When we look to the european numbers coming out shortly, it is likely that will be another poor number. It points to an Economic Contraction well above that 7 or 8 in the quarter so certainly something to watch for. Matt i want to quickly ask what responses you are hearing to the question of the day or what your response is. How important is trade peace for asset prices . I thought it was interesting, we heard phil hogan yesterday loving for trade peace even ahead of an important brexit negotiation. I think certainly this renewed trade tension between the u. S. And china is likely going to be a market stress in the coming months. I think ultimately, what we are seeing is just of reaction function from global Central Banks amid this pandemic. It will likely be a sufficient safety net for markets. We are seeing these dismal earnings in the reporting season. Yet, that has not yet proven to be a sufficient catalyst. I think Going Forward, it will be more a case of the 2019 playbook. If we see an imposition of tariffs beyond the rhetoric, that will weigh on assets, but likely on an unsustainable basis. The administration is likely to respond to negative market interactions. China does not want to see depreciating currency. They want to maintain these capital flows. I think it is in the best interest that we will see these tensions relatively contained. Risk assets are likely to continue to glide through that through this year. Anna just getting the german number. German april services pmi, 16. 2. The prelim was 15. 9 so not far at all away from that prelim number. That puts the composite number at 17. 4. I suppose for those who are exposed to risk, one of the good things about this number is yes, it is really died, really week but it iseally weak, not all that far away from where we thought it was going to come in. Thats the only Silver Lining i can find right now. Absolutely. Whats important to monitor is the Services Ratings Going Forward. Manufacturing activity can be turned on relatively quickly but it is confidence within services and the Service Oriented economies. We are going to have to need to see these numbers pickup in the coming months. It is unlikely to get back to those expansionary 50 levels for quite some time. This is something to watch as a forwardlooking sentiment indicator for the markets. Matt laura, thanks very much for joining us. Laura cooper talking to us about the numbers that we have seen so far on the numbers to watch out for today. We are going to get those Eurozone Services and composite pmis out in just about three minutes so stay tuned for that. This is bloomberg. Staying connected your way is easier than ever. Youre just a tap away from personalized support on xfinity. Com. Get faster internet speeds with a click. Order xfi pods to your home in a snap. Or change your Xfinity Services with just a touch. All in one place. Youre only seconds away from all of that on xfinity. Com. Faster than a call. Easy as a tap. Now thats simple, easy, awesome. Francine phase two. President trump intensifies his push to reopen the country, saying americans should begin returning to their everyday lives, even if it leads to more sickness and death. The ecb stands by its inflation mandate. Ases surge at novo nordisk, patients snap up diabetes medication ahead of the lockdown