Transcripts For BLOOMBERG Bloomberg Markets European Open 20240713

Boris johnson announces the first step to easing its lockdown. Donald trump combats an outbreak in the white house as he tries to return to work. Vice president mike pence spends the weekend in selfisolation. The European Commission threatens to sue germany. Therong rebuke over Constitutional Courts ruling on ecb bond purchasing. This is the picture weve got. Welcome to mondays program. Of futures, euro stoxx 50 futures up by 0. 4 . Ftse futures upice 0. 7 . Up by 0. 7 . We have seen the nikkei doing quite well. The hang seng doing quite well. Less well in the chinese market, but broadly speaking, positive. In response to a lot of talk about stimulus, we have had talk from the pboc and china, policy coming through in india. Lots to think about in asia. Also thinking about the european context. We will look to where all of that conversation goes. That expectation of fiscal policy doesnt seem to be underscoring the positive move in equities. Reopening gradually, very gradually. Economies with a positive effect. Lets get the first word news update. The European Commission is threatening to sue germany challenging the European Central bank policy authority. On eu law isd always spoken by the European Court of justice, adding eu law has premises primacy over national. Infringement proceedings against germany are possible. We speak to the lawmaker later this morning. Pence united states, mike is selfisolating after his press secretary tested positive for coronavirus. Everyhas tested negative day according to a spokesperson and he is not in quarantine. He plans to be back at the white house today. The worst may be yet to come for u. S. On employment. That is the warning from neel kashkari. He is also saying congress should step up providing more help. He made the comments on abcs this week after u. S. Payroll data showed a loss of more than 20 million jobs. First word news from bloomberg, let me also tell you what is going on in these markets. France, italy, and the u. K. Reporting since march, though south korea warns of a second wave of infections. Boris johnson said there would be no immediate end to the lockdown as he detailed the initial steps to kickstart the economy on sunday. Lets get to the markets now, how are markets responding to the latest news . Mark cudmore joins us from singapore. What do you think is underscoring the optimism in markets . Futures pointing higher. Is it the lockdown measures being tentatively listed lifted . Is it the expectation of more support to come . I think it is a combination. The fact we are using lockdown restrictions is providing a boost to sentiment. There is that backstop. The message that if it has not been sufficient stimulus so far, they are willing to do more. Central banks are willing to do whatever it takes. It may be does not prevent a second dip in equities, but it will prevent the doomsday scenarios people were considering. We finished positively last weekend that momentum is carried into this week. To startnervousness seeing whether these lockdowns work. We have the delay before we get the virus impact. In terms of the u. S. China tensions in the background, people are not sure where that is going to go. Matt miller is with us in berlin. Jump into the conversation, matt. On, i am here and focused mark, the conflict and now that has broken out between the eu and germany or the European Commission and germany, the European Court of justice and really the German High Court here. How do you see that playing out . See wolfganged to say it threatens the existence of the euro. Mark i have been quite surprised myself by how negative the commentary has been from within the eu institutions toward the vulnerability of the euro. I think that is one of the worst signs, they are saying the euro project that risk. I do not remember it getting so much criticism, the euro getting so much criticism during the euro zone debt crisis. One of the messages at the time was that they would do whatever was required. That was a consistent message. Even if they did not deliver, they were talking the talk. This time it is slightly worrying. The one thing that has confused me around this and maybe provided reassurance this is not going to trade to negatively is the commentary over the last few days has been very negative on the structural divide between germany and the ecb and how it might lead to the end of the euro, how one institution might sue the other. It has divided the Legal Precedents in europe. And yet over the last few days, the euro has not weakened any further. It has been relatively steady the last few days, which may suggest that people who are andish the euro already we need something substantial to hit the next trade lower. Despite the negative news, and it is negative, the euro is trading positively. Really interesting move in the euro. Let me ask you the question of the day. I know you and the markets live team have been thinking about how we will map unemployment not just in the u. S. , but elsewhere. How will that change markets . We saw positive response arguably in risk assets to the jobs report friday. Maybe not as bad as some anticipated, but expectations are all over the place. What do you think the market is going to make of this unemployment story . Depending on how temporary it is, i guess. Is consistency to the feedback we have been receiving. It is disappointing, some of the internal views, the impact of such unemployment will linger much longer than seems to be priced in markets. We are getting that divergence. The stimulus is supporting on employment, but there is there are businesses closing. These people will struggle to get jobs for a long period of time. This is not just a view of people who are more negative on the economy. We are seeing official forecasts suggest a year after the impact of the coronavirus hit initially , we are going to see unemployment levels below a level unprecedented until this crisis. The idea people are just going to go back to work once you reopen the economy is not true. What will be the impact of the fact that large swaths of the population will be unemployed, consumption will be down, and will it change politics massively . Will we be talking about a universal basic income . It is going to play into the political arena for the next several years, it is going to hurt consumption, it is going to change the form of consumption, and it is going to add to the debt burden. Governments are seeing this rampup. That is going to be one of the longterm consequences. They are probably going to have to keep growing them because they are going to have to provide social Services Support to a level they were not planning a few months ago. How do you see the negotiations going between there are a couple of conflict areas here. To have and china seem a fairly iffy relationship now, worse than before the coronavirus. The u. K. And the eu still need to negotiate brexit, which it seems other things take priority right now. How do you see these trade relationships working out . One forore important markets is definitely the u. S. China one. Perspectiveyones seems to be skewed by their underlying bias rather than any new information. It really could go either way. Warannot see the trade between the u. S. And china flareup properly again. It would be a hammer blow to markets. I have no idea whether it will or whether it will all go quite positive. There is a bit of bluster. It has been easier to predict the u. K. , very fraught and unlikely to end well for the u. K. It is going to be very negative for the u. K. , but i think the brexit damage the last for five years and the decline in relevance of the u. K. And the Global Economy and the Global Political circle just means increasingly at the margin i should say the marginal impact of what happens to the u. K. Has shown diminishing returns. It will be negative. It will be bad. It will play out over many months but it is not going to drag down global markets. Matt mark cudmore Bloomberg Markets live managing editor. You can join the conversation. If you have a view, share it with us. Type ib tv in order to be part of that conversation. Next, lockdown confusion. Boris johnson faces resistance to his back to work plan. The next phase next. This is bloomberg. Matt welcome back to Bloomberg Markets. This is the european open. We are just over 45 minutes to go until the start of cash trading across europe and the u. K. Futures are pointing higher. Lets get the Bloomberg Business flash. These are top corporate stories from the bloomberg terminal. Saudi aramco is in early talks about delaying payment for a controlling stake. Sources tell us it wants to stagger payments more and reduce the size of the initial installment of the kingdoms sovereign wealth fund. The oil giant is looking at, if it is possible, to reduce the price tag on the deal. Group is looking for financing after a 20 drop in fullyear profits. The owner of the worlds biggest Longhaul Airline raised 1. 2 billion in the First Quarter to provide a cushion for coronavirus. It plans to tap debt markets for liquidity. The california county blocking tesla from reopening its only u. S. Car plant. Elon musk is threatening to relocate to other states to keep manufacturing. He says the carmaker will sue and has filed a complaint with the district in san francisco. That is your Bloomberg Business flash. Anna Boris Johnson has announced the first step to lift lockdown. Homee who cannot work from will be told to go to work. Unions and the Opposition Labor Party have criticized the plane saying it raises more questions than answers. Let us speak to julie teigland. You were listening like many other people and trying to work out what it meant for you, for your family, your business. Like the path forward to the u. K. Is where are now . Are we still seeing is clearer now . Are we still seeing confusion . There are a lot of details that need to be worked out. It is difficult to design strategy for an entire company an entire country with various things that need to be considered. For example, regional approaches as to how the virus is developing and the sector approach from a business perspective. Certain sectors have been harder hit. Certain sectors have difficult issues resuming work certainly simply by nature of how that work is, social distancing within their production environments is very difficult. I think there is quite a bit of work to do over the next few weeks to make sure we rampup over those three phases and ensure we get our economy going again, but playing the health and safety of our workers first. How will you countries respond to another hotspots . Ew infection do you think plans are in place that make sense . Julie what we would be encouraging governments and finance to do is ensure they have incorporated this new reality into their strategy. Ensuring that we have accounted for effectively the new volatility. We expect hotspots to emerge, perhaps not a murder immediately, but the next six to 12 months. Vaccine, therea will be temporary shutdowns where the virus reproduction rate reaches certain levels. We are Encouraging Companies to make sure they can respond by having very localized strategies. It allows us per production site or Office Location to respond in a way that protects the health and safety of their workers. Thats going to require a number of things, including leveraging the benefit of technology to do that, whether that is with, for example on the government side, the tracing apps that are necessary or on the business usinghe technologies workplace assignments and the tracking of workplaces, better scheduling tools to make sure companies now where workers are and ensure they are keeping them in a healthy safe environment. When you speak to clients with Global Supply chains, do you find that they want to rebuild trust in those Global Supply chains, or do they want to create something more localized . Interestingt is an combination. Every company is doing a reassessment of where they are on their supply chain trying to assess what is the resilience of that supply chain Going Forward . Rethoughtng they have their price points, does that apply now in this new environment . They are rebalancing offshore, nearshore, and local operations, realigning logistics, and restructuring staffing and organizational models. You mentioned an interesting point. A lot of issues uncovered in the past two weeks and months, there have been dependency uncertainty areas in supply chain. Companies are calling for a rebalancing, making the supply chain more resilient by leveraging local providers. I think you are going to see a pivot to, well continuing to have a Global Supply chain, including more local and National Elements to make sure that supply chain is resilient, more than it was the past few months, frankly. What percentage of work is going to stay at home . How money people are going to be content working at home offices . What percent of the workforce are managers going to be content having there . That is an interesting question. I would have to get out my crystal ball. Our studies and expectations reflect that there will be a new normality. I do not think anybody is going to be happy with it completely. Longerterm up a to 30 of the workers would have ability to leverage more Remote Working in the future. Whether they are satisfied in the longer term remains to be seen. We see the possibility of leveraging technology to allow people that flexibility. We are estimating 30 for that. Matt thank you for joining us. Coming up, a showdown in europe. The deepest recession in a century. The European Commission president threatens to sue after the German Constitutional Court challenges the authority of its eu counterparts. This is bloomberg. Open this is the european just about 35 minutes away from the equity cash trade across europe. Ftse futures gaining 0. 75 . The European Commission has threatened to sue germany twice in one weekend for not abiding by you eu law. It follows the landmark ruling by the countrys Constitutional Court challenging the ecbs monetary authority. Commission president ursula von der leyen said the final word on eu law is always spoken in luxembourg, referring to the European Court of justice there. Nowhere else. The European Commission is tasked with the functioning of the euro system and the unions legal system. We are analyzing the ruling in detail and we believe that the next steps which may include the option of infringement proceedings. Joining us now is bloombergs Legal Affairs correspondent in berlin. There is a lot to sort out because it is the European Commission talking about the German Constitutional Court stepping on the toes of the ecj over an ecb ruling. But basically, ursula von der leyen is saying europe trumps germany. What are her options now . Has very fewshe options. She is the president of the European Union and she has to defend its integrity. She has to take action one way or the other. She has to talk to the germans. She does not have to file a suit immediately. She can initiate talks, try to stop the conflict somehow. If that does not work out, she probably has no option but going to court. What can germany do to avert this conflict . Is there interest in averting a conflict from the german political establishment . Karen of course. Germany has no interest in escalating this. That is the question, how do you do it . We are talking about a ruling that is out there from the top court, a very Political Court and a very independent court that has been critical about its own government a lot. If the German Government wants to help throughout this crisis, it cannot just overturn the ruling. Imagine howult to you negotiate Something Like this. It is really a quagmire. I have no idea how to solve it. Thats going to be the difficult side. There has to be a solution somehow. Bloombergs Legal Affairs correspondent for germany. Thank you for the analysis. We have european futures pointing to the upside. We will see what we get. Some of that positivity at the start of trading. Season. Dire earnings it has not done anything to stop stoxx from posting gains. We will break down why and look at the rest of the year. 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. Anna welcome back to the European Market open. Talk about the earnings season. The First Quarter results in europe have managed to disappoint already low expectations. The majority of companies have reported numbers for this quarter and the ongoing theme, the worst is yet to come. Second quarter, Bloomberg Intelligence expects ets to fall despite the share prices have been supportive across the continent. Lets break down what to expect Going Forward with Bloomberg Intelligence senior equity strategist who joins us now. We are past the peak in earnings in what we knew was going to be a dreadful few months, period. What are the key points to take away from the announcement so far . What i was suggesting is that things are going to get worse. Indeed. We have more than 80 of the European Market cap out and done. Aboutexpectations go for 24 . We have actually been seeing something on the order of 29 . No surprise from the standpoint of where the worst pain is. It is in energy, discretionary and financials, down anywhere from 40 to 65 . As you mentioned, a lot of bad news was expect that in the market. It is shifting forward. From the standpoint of actual market impact, when companies ,id beat lower expectations misses were only about flat versus the market. It has been interesting seeing what we knew was going to be bad actually pretty well digested in the context of the market. Everybody knows profits are going to take a huge hit. Revenue probably as well. Free cashointed out Balance Sheets are bigger focuses for investors. What are you seeing, were you expecting him not . Is you are going to have to be in business to take advantage of the recovery next year. Your Balance Sheet and cash Flow Management is what is going to get you there in what we know is a throwaway quarter. Free cash flow this quarter is down about 40 , which is bad news. Capex has yet to be cut. First quarter is running about flat versus a year ago, interestingly. Are starting to see more permanent job cuts being announced, which is one of those glass half empty elements we can discuss as well. Importantly, where companies are managing cash outflow beyond operations, we have now seen something on the order of 130 billion in cuts to dividends. , not goingt counting to be surprised if we see that to 150 billion euros. There is a lot of activity and we will see more of this to come. The really interesting capex cycle has not adjusted from a year ago. Thinking of that and other ways to measure resilience and response, how is the rest of the year shaping up in terms of your expectations . As it stands, and you the full this earlier, impact of the lockdowns, current expectations are running for more than 40 drop in earnings. Downs get better in q3, 30 , q4, down 20ish percent. , if all the focus is on the recovery of 2001 2021, experts are calling for something of a 30 rebound. This takes us essentially back to 2019 numbers. From that sort of market psychology, it is interesting to think about valuation. If you look at current year numbers, the forward earnings, 18, 19 times, well above two standard deviations higher than the norm, and that is scary. If you look at 2021 numbers, it is much more reasonable and to 14 a normal band of 13 times, which the market within europe has been talking about. Matt we have bounced from the bottom pretty sharply. How do you analyze the rally we have seen and what do you think about positioning Going Forward . The euro stoxx as an from march 18. 0 interesting to note the ftse bottom was march 23. That was the day the lockdowns were announced. Markets do think forward. Importantly, this is not been a v recovery in the market. It has been a threepart plunge. There was a bounce that took a couple of days. And really we have had very little sense. The rally of the European Market was march 26. The u. K. Market was march 23 to march 26. If you were not participating been, you are somewhere up a couple of percent and that is it. Past market bottoms, whether it 2000 11, 2012, 2008, 2009, they were quite sloppy affairs. Multiple big swings before earnings really drove the sustained recovery. Period, defenses beat cyclicals. Move throughsively the summer and into autumn, you can extend into industrial materials and whatnot, it makes sense. But this is not a oneway affair in our mind. Thanks so much for your time. Tim craighead joining us with some analysis on what we have seen and what to expect when forward. Let us get the bloomberg first word news. Todays top stories from the terminal, in the u. S. , mike pence is a selfisolating after his press secretary tested positive for the coronavirus. Pens has tested negative every day according to a spokesperson. He is not in quarantine. He plans to be back at the white house today. China is pledging a stronger monetary response to soften the hit to growth. The central bank sing the country faces unprecedented. Hallenges from the pandemic in its Quarterly Monetary Policy report and also drops a commitment to avoid excess liquidity flooding the economy and says it will maintain liquidity at a reasonable level. Saudi arabia has announced a slew of austerity measures, tripling valueadded taxes, cutting allowances for government workers according to state media, the savings are valued at nearly 7 billion and they are being taken as the coronavirus pandemic continues to hit oil demands after an historic route in prices. The worst may be yet to come for u. S. Unemployment. That is the warning of minneapolis fed president and noted neel kashkari. Dove neel kashkari. He made the comments on this week after payroll data showed unprecedented loss of more than 20 million jobs in the month of april. Global news, 24 hours a day, on air and at quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. Anna lets talk about what is coming up next. We are going to focus on the u. K. Story. Boris johnson faces resistance from unions and other forces, but things look up in the rest of europe. The latest on the virus and the lockdowns lifting. Anna just under 20 minutes to go until the start of mondays equity trading session in europe. In london, futures up by 0. 8 . Let us focus on the u. K. Story. Boris johnson has announced the first step to lift u. K. s lockdown. Britain becomes the latest country to begin its transition back to normal as the situation improves in part of europe with germany seeing the smallest number of new infections in six days. Joining us now is our International Government executive editor. Let us focus on that latest news flow. I have to confess. I was watching yesterday as a citizen and a journalist and i was confused as to what exactly was changing today versus wednesday versus some other day in the future. Also, if i have to do any more than walk down the stairs to come to my current place of work in my house, i would be confused as to if and how i was expected to get to work. Thats right. It is going to be a careful, slow easing. Is causing do that confusion today after the prime ministers comments yesterday. This morning, saying, does that mean a need to go to work in manufacturing or construction . How does that happen . How do i get there . What will it be like . Will i be able to access and so on. The government is now saying a there is public transport guidance tomorrow. Boris johnson is encouraging you to walk, drive, or cycle to work, but that is not feasible. How can i get public transport . How will it be safe . There are a lot of questions not just unions and labors are raising, but business groups are raising. We have a responsibility to Tell Companies clearly what to do to keep people safe. The government will be making a statement later today. There will be a 50 page plan released and discussed in parliament with details on public transport guidance likely from tomorrow. Matt we are getting some headlines right now from dominic raab. He is saying the ambition is to get all primary schoolchildren back to class right now, though he is saying it is not safe for households to mix within homes. Im not sure how you would avoid that unless you have a very large home. Sayingcase, dominic raab the foreign secretary that he is asking scientists for advice on household mixing. The messages do not seem very clear. Much borisre how johnson speaks for the entire u. K. I am waiting for small manufacturing business, errol other clothing, to start putting together motorcycle jackets again, but they are in scotland, so Nicola Sturgeon seemed to doubt on cast whether johnson speaks for scotland as well. Is this a panu. K. Strategy . This is raising the question more broadly of the governments handling of this. Stay home, stay alert. There has been confusion over what that means in scotland has said they have not going to use that messaging because it is too confusing. If you look at social media, there is a lot going on about being on guard for something invisible and whatnot. It is a question for people starting to go back to work and what that means. Labor and unions press the point. You are seeing scotland saying, hang on. Specifico give more guidance and prioritize that kind of clarity that we do not seem to be getting in the central government. And other parts of the u. K. Are going their own way. Questions about the capability of the government under boris , after a series of perceived missteps. Questions about his ability to access ppe if people are going back to work and so on. There is a lot we do not know. That is showing up in the messaging. Matt thank you for joining us. Our International Government executive editor talking to us about the longawaited announcement from Boris Johnson yesterday. I guess we will spend the rest of the day trying to figure out exactly what it means. President trumps top u. S. Economic advisor says the country will not have to shut down its economy again, even if there is a resurgence of coronavirus cases. Told us hew also expects a return to Economic Growth in the second half despite what he called the heartbreak of fridays jobs report. Lets take a listen. This is a tough time. But it is a tough time for everybody in america. Wherever you work or dont work, it is a tough time. This jobs report is full of heartbreak. Full of hardship. I believe it will prove to be temporary because i think the pandemic contraction or the contraction in the economy caused by the pandemic, covid19, will prove to be temporary and that we are coming down the homestretch in terms of reopening the economy. But it is a rough number. There is no question about that. Some of this looks to be temporary layoffs. Maybe about three quarters of it. That still does not make it better. People expect to return to jobs. Look, President Trump leadership, Vice President pence put together enormous rescue package, cash, liquidity, Federal Reserve, payroll protections, a remarkable thing. Adding it up, about 9 trillion now including the Federal Reserve and what we have done on fiscal policy. Some of this may have worked. We may have cushioned the decline. That may be part of the story inside these very difficult numbers. We will see how this works. We will see whether we have to go back. President ialbout policies, because i do believe the second half of this year, according to the cbo and revit forecasters, the second half is going to have very significant bounceback in Economic Growth. That will head into 2021, which could be a fantastic recovery year. I want to understand and i know you are an optimistic man, whether you have done Contingency Planning for a second wave and another shut down. Are you doing that now . We are. It is a subject that comes up. Im not going to go into details outside my lane. I have talked to the Terrific Team President Trump has assembled. One of the senior people in that happens, youd what know, right now the virus numbers are flattening out. That is a good thing. That means we can reopen this economy. I asked what happens if you get a jump back up in the virus numbers, and the response was simply, look. We will not have to shut down because first of all, we know more, we have more experience, and second of all, we are much better equipped with the right tools. Are you rethinking your relationship with the Chinese Communist party . I do not think we stopped. I will say this. From reports today, ambassador lighthizer, secretary mnuchin, met with the vice premier of china. It was a very constructive meeting. The communique was very positive. China continues to telus to tell us they have every intention of meeting the requirements and the implementations of the deal that was signed last winter. It seems like 1000 years ago, but it was only a couple months. They are behind on commodity purchases. That may be a function of market and economic decisions positions. They are pledged to continue including remedies for International Property theft and related measures. Those talks seemed to go well and were constructive. However, the relationship is very complex. We know the virus originated in china. , thee investigating government, the security council, state department, etc. , are carefully investigating what happened and what did not happen. What may have happened and what actually happened. China has been not transparent. A lot of people are concerned. I saw this with the president at the g7 video teleconference meeting. The other World Leaders felt the same way. They will be held accountable. They will be held accountable. When the final studies are in. Anna larry kudlow speaking to us about the u. S. Jobs report and the u. S. China trade story. We are minutes away from the open. Watchl get the stocks to in a moment, including a Payment Services business dumping freemarket trading after shaking up management this december. Anna welcome back to the European Market open. Futures suggest we will see green on the screen. Dani burger joins us with the latest. One of the biggest gainers, at least set to be today, is wirecard, up on trade. The payment provider says it is going to be expanding its board, that is its management board, also appointing a chief science officer. We dont have the name yet. This is to ease some of the concerns around their accounting practices. Shares tumbled over the past few weeks. Finally, perhaps a rough day. Organic sales slip 9 . This is a big hit because of automobile sales. However, the detergent unit making up some of those losses because of the stockpiling around the coronavirus pandemic. Finally, telefonica getting a 4 billion Syndicate Loan to help with its merger of global medias virgin media. Thank you for that. Stocks you want to watch as the market open. We have just four and a half minutes to go. Kickes pointing higher to off european stock indexes. The open is next. 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. To go until the start of European Equity open. Another week. Headlines. Stay alert. Global stocks climb as the coronavirus is stabilizing in europe. Johnson taking the first tentative steps to ease the u. K. Lockdown. President trump tries to convince americans that they have faced the worst. And the European Commission threatens to sue germany. A strong rebuke issued over the Constitutional Court ruling over the ecb case. Matt, take us through the futures. Matt we do see futures pointing higher. Ftse like investors in futures are a little more am for this monday but we see that and euro stoxx 50 futures ftse futures up 1 . A stronger open for london at a the gate. Opened upexes are now. We typically see the ftse open first and there you have it as well as the ibex. Gaining0. 5 in the ibex 0. 75 as spanish people are finally allowed to go outside. And i think i heard this morning that they can gather in groups of 10 outside the hardest hit areas like madrid. You see gains as well on the other equity indexes opening now including the aex in amsterdam c in paris. A looks like we have a risk on monday morning. This morning. We will see improvements in the next couple of minutes as we get more additions to trading including the dax in germany. Anna . Anna breaking news. If we cast our eyes further afield. Go to the middle east. Index dropping two point 9 after the kingdom announced a tripling of vat going up to 15 . We will keep an eye on the bounce we are seeing in european indexes and the bounce in saudi. Ok to end thehe lockdown that will take months. Julian chillingworth joining us. We see a bounce in markets. Do you think we have much further to rally on the news of lockdown being lifted . I suppose there is a risk of a second spike in infections infections or tragically in deaths. Julian good morning to you both. Spike ined, a sudden the number of new infections or deaths would cause things to be unsettled. It is interesting come in the states about half of the states were open and more are scheduled to do so in the next few days although some are resisting that effort at the moment. Fedregarding this dike, the already has stated they will stand behind the market. That may not be the case in europe. European markets could well be spooked particularly if we see labor markets opening up more. And the numbers could pick up again. I think investors remain wary in we have had a big bounce equities in particular in the last six weeks. Matt a huge bounce back into able market on back into a bull market on a lot of indexes. Does that make sense . I know you do not see a vshaped recovery in travel and tourism. In fact, im guessing you do not see a vshaped recovery in the nations of europe or the u. S. At all. Julian there has been a massive stimulus package announced across the globe and that is something we of not seen since the second world war. So it is no surprise that when investors got to grips with the that it of that package was going to have a positive affect on asset prices in the shorter term which we have seen. Now, i think it is all about how people psychologically adapt to the easing of lock downs as well. Will they were turned to the shopping quickly . What will people be more relaxed about going out to age in those areas where they can do that going out to eat in those areas where they can do that . There is quite a lot of uncertainty and we have had a lot of debate about what shape at the outset a recovery will be. Recoveryonal vshaped i would say is looked over at two or three quarters. I am an optimist. I think we would like to have one quarter up and one quarter down. We could see recovery coming niney in the next six to months. Anna such as deep down such vsteep down and steep up would be hopeful. The market seems to be pushing the fed in that direction even though many fed officials have said they dont want to go that way. If the fed can hold the line which i think they will be very keen to do, i do not i think there will be management the curve and i think there will be more stimulus to calm. Come. K stimulus to i think the republicans will push for another package in june. I think the fed has already it has cutting rates below zero in its armory. I think they can do a lot more in terms of purchasing other Asset Classes as we have seen in japan. There is a lot more they can do. Matt julian kumal you are going to stick with us. We have more questions for you. Julian chillingworth from rathbone. Coming up, with lockdown across europe easing, we will speak to calvino, the spanish minister. Dont miss that interview next. This is bloomberg. Matt welcome back to the european open. We are 10 minutes end of the session and we are seeing gains up across European Equity indexes. The continental indexes are not doing quite as well as the ftse with the exception of milan where it is showing stronger gains. Were seeing decent gains on the ibex 35. Bloomberg business flash. Todays top corporate stories from the bloomberg terminal starting with Emirates Group looking for financing after a 28 drop in fullyear profits. Longestr of the worlds hall airlines is providing a cushion from the pandemic and it will cap debt markets for further liquidity. The musk is lashing out at california county blocking tesla only u. S. Car his plants. He is threatening to move operations to another state ceasing manufacturing in california. He has filed a complaint with the District Court in san francisco. Those are just some of the stories from the bloomberg terminal for you this morning. Over to spain where banks are using a Government Loan Program to help Small Businesses ravaged by the corona Virus Outbreak and on its books. Sk program in catalonia the funding went to pay down an old debt. According to the study, most of the countrys large banks were following that practice led by several banks. Joining us now is nadia calvino, spains economy minister. For yourter, thank you time. How do you feel this program is working to cushion the blow of the shutdown . Thank you, matt. Good morning to everyone. One of the key measures we have worked on was to establish the 100 billion guarantee so we could continue to make sure the economy could run and liquidity could continue to flow and we are quite satisfied with the way the program is going. Than 60p to more billion so far. Our numbers do not reflect this kind of shifting of a credit. 90 ofseeing more than the guarantees being used to issue new credit particularly to selfemployed workers so our assessment is quite positive that we are reaching those that we wanted to fund. Anna that is interesting to hear. Good morning. Let me ask about the aviation sector including iberia. Are you planning any other support for the sector as we see from other european governments . Min. Calvino as we see every rt sectorir transfepo is one of the industry most directly impacted. Thatmes as no surprise some of the airlines will need funding and way see all of the different governments trying to provide different sorts of support. Ist we have so far done issue public guarantees and supported different credit lines that are being issued by the banks in spain and we will pursue this policy of supporting the airlines so they can cushion the very hard blow coming from the pandemic. Matt if you are going to take such extreme measures to save somenes, especially may be that were not very well prepared for a crisis to begin with, why do you not take a stake in those airlines . Dont you think that taxpayers deserve a piece of the business if you are going to bail it out . Min. Calvino two issues. The airlines were in a Different Health situation before the crisis broke. Some airlines were are in a tricky financial situation while others had a more robust Balance Sheets so they may require different kinds of support. We are firmly supporting the european response. Onee large carriers of nationality or another are all european carriers so we are strongly defending that we will provide a level Playing Field and the different kinds of support to provide a similar level of funding and credibility to the different operators so we do not create a competition problem at the end of the day. You think some of the support given to other Airlines Breaks the competition rules, minister . Not likeino i would to prejudge the number of dealings going on and some of the decisions have not been made yet. I think the European Commission is keeping a close eye to make sure there is no breach of the competition rules and we do not want to end up with an unlevel Playing Field because of the different capacities of the different governments to support the different airlines. We should all provide the same manner of response. Spain andave seen italy both hit hard by this and both countries have wider deficits, greater levels of debt then germany for example or the netherlands which makes it harder for them to confront rebooting their economies. For still aing perpetual bond set up in order to finance that . Or are you still hoping for some sort of neutralized debt . We have different issues. First of all, you are right to say that we have been hit harder than other countries. We receive every year more than 18 million tourists in spain so it comes as no surprise that our societies are some of the most directly hit by the pandemic. Thanks to the very Strict Lockdown measures we have adopted, we have seen a clear improvement in the health red records and indicators showing we are on the right track. I hope the recovery will kick start the second part of the year and despite the fact that the economy will suffer enormously in 2020, we will have a strong rebound in 2021. This is what all forecasting institutions foresee for spain in particular. Now, a different issue is the fact that the pandemic is ping the european economy we are all in the same boat and we defend that there should be a european reconstruction or economic recovery fund. We should be funded jointly. We dont think the outcome to the crisis should be that some countries are more in debt than others. We need to make sure there is a strong recovery than a fitting all citizens in europe. As i said a moment ago, we are all in the same boat. We all want to come at of the crisis as quickly as possible and as soon and as fully as possible. Countries are in different boats in terms of fiscal responsibility. Germany haves like been historically better at dealing with finances than other countries like italy and spain. You are ready had a big debt coming into this and also countries like germany do not have the type of social safety net. When you are out of work, you get paid 65 of your salary and there i think it is closer to 80 . Shouldnt money that essentially germany is lending to spain and italy be attached with some conditions . As. Calvino well, in so far the safety net is concerned, im afraid that germany has a much stronger safety net than we do. Every year we get recommendations from the European Commission and elsewhere saying we should reinforce our system. Unfortunately, it is not the strongest part we have in our country. You are right in that we have made a huge effort to reduce our gdp. Compared to our we have gone down significantly, 95. 5 . We expect the ratio this year to go up to 115 . This is a temporary exception. If you reach the downward trend which i hope we will be able to resume as soon as the economy is stronger but for the moment, all countries will be faced with the same trouble witches we cannot put health and the economy on different tables. We have to get out of the Health Crisis as soon as possible if we are going to recover as strongly as possible. Anna minister, and to do that, will you borrow from the esm . And the changes they have made to it to make it more favorable to borrow. Min. Calvino i think it is good that we have been able to reach an agreement on three different tools which are based on loans. These are not grants or transfers or loans. One is the pandemic line. Secondly, the new instrument which would reinforce shortterm work schemes like we have enacted here in spain. To provide, the eib a common guaranteed. We are solely and strongly supporting these three tools. The moment our economy ditions are favorable several deals have gone into the negative area and we have been able to get good conditions and therefor, we do not have any problem in tapping into these financial markets. Think it is good there is a for citizens, companies, and governments at the european level providing an tool toal reinforcement face this pandemic. Matt ok, thank you very much, ms. Minister for joining us. Nadia calvino, the economy minister of spain. Really a pleasure to have you with us today and in such a difficult time, great to get your insight on spain. We will get back with Julian Chillingworth next to see what stocks he is picking during this coronavirus. That is next. This is bloomberg. Anna welcome back to the European Market open. 24 minutes into the trading session and we have been expecting positivity in europe. Ftse 100 up by 0. 9 . The dax and the cac in positive territory. Julianget back to chillingworth from rathbone who has been waiting patiently. With the economy minister from spain about support in the shape of loans to spanish businesses. When you are looking across Balance Sheets, one thing that people will look at is debt level. Is asking companies to borrow their way through the crisis will that be looked back at as a good strategy . Honestly, you have got to look at which sectors are going to be happily invested. Sectorhave a cyclical carrying a lot of debt then one must be concerned. And also, i think it is going to individual stocks. In the round, we have been concentrating on companies with companies able to produce a decent cash flow to help them get through a riod aged parry owe oe recovery. Matt what do you think about regionally investing . Will europe like behind the u. S. Lag behind the u. S. . Julian i think it is partly sector driven but in our opinion, we are not great fans of continental europe. Currently, we think there is a lot of pressure. You mentioned the conflict going on between the German Constitutional Court and the eu and we think that will run on longterm. If the coronavirus bonds are issued across europe. That technology will continue to be a winner through all this. Matt and they have it in spades there. Fromn chillingworth rathbone, thank you for joining us. This is bloomberg. Anna welcome back to the European Market open. European equities starting the week in positive fashion. The stoxx 600 of 0. 7 and making decent gains through the morning. U. S. Futures have been pointing higher through the Asian Session and they continue to be pointing higher. Let us have a look at where we are on the sector specifics. Banks to the upside. Up by around one play 5 . Resources to the upside. Real estate looks to be the biggest laggard but that is also in positive territory. , we have a positive session for European Equity markets. Some measures to lift lockdowns around europe and expectations that fiscal stimulus certainly in asia in that session is having an impact on what we are seeing in global stocks. Matt let us get the first word news. Bloomberg top stories from the terminal. In the u. S. , Vice President mike pence is self isolating after his press secretary tested positive for the coronavirus. He has test did negative every day since then according to his the viceson but president is not in quarantine. I still do not know the difference between quarantine and self isolating. , i assumee isolated that is pretty much the same but in any case that is over tomorrow. The European Commission is threatening to sue germany over the countrys Constitutional Court challenging the European Central banks Monetary Policy authority. The commissioner says the final word on European Union bought is always spoken by the European Court of justice adding that the eu law has privacy primacy over National Laws in the union. Eu marketr to an says infringement proceedings against germany are possible and we will speak to that lawmaker. He published his letter and we will talk to him a little bit later on. Saudi arabia has announced a slew of austerity measures and is tripling value added tax and cutting allowances for government workers. They have many government workers who live on these allowances those lay without working. According to state media, the 27ings are valued at nearly billion dollars. They are being taken as the pandemic continues to head oil demand after a historic route in prices. Global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. Bitcoin is about to see its and it could happen as soon as today. A short explanation of what this means in the bitcoin network. User transactions are recorded on a digital ledger called the blockchain. Miners are in charge of this task and they are rewarded bitcoins for doing that. The amount of bitcoins they get for each block decreases every time you see a halving. 210,000t in half every blocks which means miners have to do twice the amount of work to get the same amount of money, of bitcoins so the event is often associated with price spikes and increased volatility in the digital currency. Joining us now is the cofounder of nexobank, antoni trenchev. What do you expect from this halving . When do you expect it to happen . Happent do you expect to to the price of the underlying bitcoin . Bitcoins fundamentals have never been stronger than they are today so we are expecting the upward trend we have seen in the last 10 years to continue into the halving. There is bound to be some volatility but traders and investors should not get caught up in the daytoday movements of bitcoin. They should remain on the Bigger Picture and the truth is the bitcoin is the only free market we have right now and it is showing amazing resilience through this pandemic and the selloff of risky assets. Without not happened the fed supporting any sort of stimulus packages or anything like that. We see the influx of new clients at nexo coming to the realization that bitcoin is here to stay and it is one of the best protection mechanisms against inflation. Anna if i take a longterm view as you suggest, i look back at mediumterm to the end of 2017 where it was up at 17,000. If i were a mediumterm investor in bitcoin, i might the disappointed by that performance. Antoni well, that is a slight ly shorter view then outone bitcoin has outperformed everything. I stand by my prediction i made with you guys earlier in january that bitcoin is bound to reach 50,000 by the end of the year and luckily, we got some strong support in the space of the likes of jones joining in the course that it is reminiscent of gold in the 1970s and i would argue that bitcoin right now is your get out of recession free card. Matt 50,000 by the end of the year is an aggressive call and you have a lot of coverage with that call as well. What underpins those expectations . Bitcoinyou think drives to 50,000 by the end of the year . Fiatou expecting other currencies to crash in the face of inflation . Antoni a quick reminder in the last two years we have seen about 8 trillion worth of fiat money getting pumped into the system and the markets have not even reached the level precrisis. In this moment of very aggressive quantitative easing, i think cryptocurrencies and especially bitcoin come in at thist opposite quantitative hardening, is the opposite of quantitative easing which is a fundamentally different thing and it is only a bitcoin is and glowing in its full glory based on the disinflationary curve of the bitcoin supply. The cost of producing it and i think the market and investors are coming to realize the Amazing Properties of bitcoin and i definitely think we are in some very good times here. Anna we are in good times but we have seen the route compared to the end of 2017. How has that affected your Business Model . Antoni the beauty of the Business Model of nexo is that it works in bull and bear markets. Who adjust their models in light of the halving in the dynamics there. We are seeing quite a few retail customers coming in, thousands every day in line with square. Doubling in revenue when it comes to bitcoin sales. Slowly but surely we are seeing institutions, largely Family Offices this has is all on the prospects of bitcoin and crypto as a whole. Bitcoin for aon couple of weeks in 2012 and it was not terribly difficult but it was not super easy. I dont think much has changed since then in terms of actually being able to make transactions with bitcoins. Does it need at some point to evolve into something we can use like apple pay or paypal or is that not necessary . Antoni i beg to differ. I think it has gotten much more user friendly. You have different apps and applications allowing you to withact for and even pay bitcoin if you like the price of where bitcoin is a so there are easier ways to do so. Are doing our part to provide easy access to your crypto via the mastercard that we have launched. Thellows you to spend from comfort of your telephone via apple pay or the Android Solutions just as easily as you would with any normal card. The userfriendliness is coming and i think this is where the different type of companies and googles amazons and will transpire out of those companies that can provide userfriendly solutions and we like to think of ourselves as such. Anna thank you very much for joining us. It is good to get your thoughts as we look ahead to this halving episode. Coming up, tracking the coronavirus. Different countries have different strategies when it comes to Contact Tracing. We will talk about the most effective methods. What do they have in common . What is different . And how useful will they be to getting us through the lockdowns here in europe . We will talk about that next. This is bloomberg. Anna welcome back to the European Market open. 44 minutes into a positive monday session. We need to talk about what is going on in the u k and more broadly when it comes to the use of technology to ease lockdown measures. The u. K. Has announced a plan. The focus is on keeping infection rate down. There is no unified approach for your but many countries are going ahead with Contact Tracing apps including the u. K. Alex webb joins us now. This is not just in the u k but the fact that we do not have a unified approach across various parts of europe some are going with the google and apple approach. And others are going like the u. K. With something more centralized. What is coming out in the wash . ultimately, it is a question of adoption. Both approaches have their merits. But, they will be moot if no one uses them. Increasingly, a few countries are starting with a centralized approach and then pivoting to a more decentralized one and i have a suspicion that it will happen in the ok there in the u. K. Keeping its options open. To try to do centralized if you can do to be ready to turn to the decentralized option. Matt how is the best way to deal with this . Alone, they wuhan had 9000 people hired to do for don the ground Contact Tracing work. Is that kind of people power necessary or canned the technology usurp a lot of that . Tech as with any solutions, when we think about ai replacing jobs, you need to have an automated element subsidy supplemented by manpower. If you are going to do Contact Tracing for a nation of 70 million plus people, youre not going to be able to do it or it is highly unlikely with Analog Solutions or people. Technology will not work because not everyone has a mobile phone. Or not everyone knows how to use the app effectively. You need to have both. The question is if you have a whether thesolution app is effective enough at tracking those contacts. App openomeone has the and whether enough people download it. Scared, they may be wary about downloading back. You need to have both. Criticismsof the from the u. K. Perspective is happening on the isle of wight. Some of the criticism has been more around the medicine thed, the way questions it asks about your symptoms rather than the tech although the tech has also come to receive some criticism. What have we learned from the experiment on the isle of wight . Alex the issue to do with actuallyng whether you have a fever or other symptoms that seems to be quite easily remedied. Inderlying concerns think it is still very early. They only began the trial on thursday and they have about 40,000 people that have not ofded it which is the scale we would need to be effective. Users. 80 of smartphone in using it to work effectively, the app and that has not yet happened on the isle of wight but as i say, it is only been four or five days reporting. And ultimately, that is why you have a trial, to iron out these issues. Go on websites or whatever, i click yes, yes, fine i dont care if people know what i shop for or where i hang out. Do a large majority of british people actually care about their data privacy like germans do . Alex british people do not care as much. Suggestion that british people will be more willing to download this than those in italy or france. Her is an irony that even though data is centralized come it is still anonymous. You will not enter your name into the app, just your postcode to give it the vague sense of your district. Not even your building. Which will help the nhs identify hotspots. He blair complaining about the privacy aspects while at the same time using google maps to get around. Granularovides very data about your movement. There is a certain dichotomy in the way people are thinking about this. We inthink that is why the media have to be responsible to explain exactly how this works ensuring they have the data they need. Is a Bloomberg Opinion columnist and you can get his columns and work and the work of his colleagues by typing ngo on the terminal. We have asked the question about mliv. On the this is bloomberg. Anna welcome back to the European Market open. Are 53 minutes into the first trading session of the week. Let us get to the market conversation with lara cooper. I know when of your colleagues is writing this morning that stocks are rallying as they see goldilocks insight. Amazing as we see the rapid the epidemic raging even though the death rate is slowly going down. We still have a threat of a second spike and yet in the market, we are talking about goldilocks. What is going on . Reacting tots are the effort by Central Banks to keep markets running smoothly and they are willing to do whatever it takes to make sure we have a sustainable recovery once we see the lockdowns lifted. That at this stage, it is really about forecasts for earnings remaining too optimistic. Ande is a long and uneven gradual recovery not priced into the markets. And the key Going Forward is that we see a potential wave of a second wave of infections. Scenario, Central Banks will be challenged to reject further stimulus so there is a great deal of uncertainty at this stage not priced into the markets still looking at this relatively quick bounce back inactivity Going Forward. If we see a strong resurgence in infections . Will markets punish those National Indexes where coronavirus comes back with force . Laura i think that will be the case because crucially, the recovery is dependent on the consumer. If we are in a phase where we have to have these lockdowns restricted that will prevent people from going back to work, that ultimately means that household purchasing power is going to be constrained even further. So this could contribute to the recovery halting and i think that will be reflected in certain countries, in this he indices. In the u. S. , we will see those specific sectors hardest hit. And it is likely the case that we will see more of those tech heavy out performances continue. Anna laura cooper, our Bloomberg Markets macro strategist. It is interesting to see the level of unemployment that we saw on friday. I was just thinking the 24 hour news cycle has such a tremendous, horrendous number. 20 Million People unemployed. Even after the friday published. This is bloomberg. Francine Boris Johnson announces his plan to restart the economy with restrictions on movement. Some shops could reopen in june. President trump urges americans back to work while combating the coronaVirus Outbreak amongst white house staffers. The European Commission threatens to sue germany. The president issues a strong rebuke of the Constitutional Courts ruling on ecb bond purchases. Good