Global deaths from the coronavirus reach 300,000. While cases continue to fall in europe and the u. S. , alarm is growing in asia over a potential second wave of infection. Stocks and futures gain even as data from china shows a slower return to normal than hoped. Focus turns to german gdp numbers. In just two hours. Looking for a drop of 3 in the first quarter. Sanofil macrons berates for suggesting the u. S. May have hurt access to a vaccine. The frenchetween president and the drugmakers ceo is scheduled for next week. Just under an hour away from the start of cash equity trading in europe, lets take a look at futures. Gains of 1 acrosstheboard. A rough dayhave yesterday in european stocks. Closing down 2 . Then a turnaround in u. S. Stocks. That has now rolled around in asia and that market optimism is prevalent in european futures. Not been u. S. Futures. Little change. Anna . Anna a little bit of breaking news. In london, this would be of some relevance. System, aand transit funding package agreed based on the assumption of 1. 6 billion pounds sought for extraordinary support. We had some reporting around this yesterday. By the way can i just anna a snapshot of what we have seen. Yes. Please jump in. Not a very frequent user of the young london Transit System. Matt i just saw london wants to put 2 billion euros into the Transit System and i worked out new they could buy 400,000 vespa by 125 scooters with that money, which i recommend is a much better way to get around the city. For 1000 euros or pounds on ebay , you only need your learners permit to commute to work. It is a lot more fun than sitting on the tube. Anna this is useful information. This is news you can use. Thank you, matt. Other modes of transport are available. Lets get back to the markets. Session coming through in the asian session. Australian markets are higher. Talk of stimulus in japan. Indias battle against coronavirus continues. Asewhere, we do see a bit of surgeon commodities coming through. Saudi aramco cut back on sales. The market showing signs of improvement. We did have a volatile day on wall street. Futures now looking fairly flat for the u. S. Session. We play catch up with the latter part of that session we saw in the u. S. Yesterday. Lets move on with the market conversation. A host of data points out of china. A mixed picture. Get to laura cooper, r Bloomberg Markets live macro strategist. We wont ask you your preferred mode of transport. But that is an ongoing conversation. Let me ask you about the data coming out of china. China is ahead in terms of dealing with the virus. Many people looking to china for data guidance. What we are seeing is factories are back in action, but retail sales are sluggish. Exactly. I think we can take cues from the chinese data as for what could happen. Saw in march and april data Industrial Production , manufacturing data is not as bad as many feared. ,he retail side of the sector determined by consumer spending, that is actually proving to be quite sluggish. That captures the fact that manufacturing can be turned on. But ultimately, what will guide economic cover recovery will be consumer behavior. That is something that will certainly guide risk sentiment in europe and the u. S. As these lockdowns are increasingly lifted. When we look at problems for em, the dollar on the top of that list. The dollar reign supreme in a lot of investment and market discussion. You were talking about the possibility of an ouster for the u. S. Dollar as a reserve currency on the mliv blog today. Who could be the candidate for that . I think what prompted this debate was really just the speculation we could see negative rates in the u. S. And the knock on effect that would have for the dollar. My response to cut the dollar is that reserve status not much could shake it from its throne at this stage. Ultimately, when we look at Central Bank Holdings of the dollar, it has remained relatively steady around that 60 mark. The next nearest competitor, the euro, is only around 20 . There really is a lack of alternative at this stage. Nearly half of imports globally are transacted in the dollar. Treasuries remain firm. See whatlly hard to could shake up that system. This will be a slow, glacial trend to see any type of alternative. Anna in a couple of hours, we are going to get the german gdp numbers coming through. We get a just of what march looks like. Expecting to see from germany . We are expecting to see the largest economic contraction. One month of the lockdowns. At the same time come and entered this pandemic from a position of relative fragility. Every sessionted because we had these u. S. China trade tensions. It is starting from a position of weakness. Certainly not going to face the same type of economic destruction is elsewhere in europe. Shift tosals will now this fiscal spending capacity. They have released a package of 7. 5 gdp. Will that be enough . Will that be effectively deployed . Of thet what the shape recovery will be like. Matt laura cooper from the bloomberg mliv team, working from home, i assume. But when you do get back to your commute. I lived in london for three years and for the first few months, i endured the tragic 45minutes logging on the tube from sloane square. You are packed in early in the morning with a ton of people who are going somewhere they dont want to go and it is dark and dank and depressing. Then i got a vespa and my 45minute commute went to a 15minute race down the embankment. It was so much fun and i look forward to going to work every day. It became a positive, uplifting experience, rather than a march to my death. That is what i suggest. If you have a chance. Good to know. Very this is indeed a motivational material. Thank you very much, matt. To being is not supposed fun, it is supposed to be endured. Matt that is so british. Let me get to the bloomberg first word news right now. Here are todays stories for you. The coronavirus pandemic is reviving the worstcase scenarios for the u. S. China relationship. President trump said he does not want to speak with his ,ounterpart, president xi adding that the u. S. Would say 500 billion if it cut off ties with beijing. It comes as china post lockdown recovery gains see factory output rising betterthanexpected, three. 9 . To the highested in more than five weeks. Allies as opec and its start scaling back crude shipments. According to petra logistics, the cartel cut exports by nearly 6 Million Barrels per day by the first two weeks in may. The International Energy agency says the outlook is improving with demand belittle stronger than expected. Unveil aidet to packages for the auto and aeronautics industries. The governor government has already promised 18 billion sectoro back the tourism as they work to reopen their economy. Klm, the Oldest Airline in europe, and renault have already obtained billions in loan guarantee, but their operations remain depressed. Global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. In a . Anna . Anna ive just been sent a very good piece. A street battles all about redefining urban space in a postlockdown world. He was coming in from west london on the district line, wanting to point out that real commuters thats all im saying. Matt, lets say what is coming up on the program next. We will talk about what shape we can give to the recovery that no doubt lies ahead. Will it be vshaped . Will it be ushaped . Or can we lend another shape to it . This is bloomberg. Welcome back to the European Market open. Looking for a bit of a bounce at the start of the european trading day. In the end, positive session over on wall street. Lets talk about the recovery of the global economy, shall we . Nvestors and economists they cannot seem to agree, but those hoping for a vshaped economy may have been disappointed. Guest andned by our he has his own view. Good to speak to you this morning. Symbolnk a square root might be useful in this case. Perhaps that backwards square root. Recoveryall, but some and then not back to where we were. Absolutely that is what we think. This is a very uncertain situation. Our basin area is a scenario where we have a sharp fall followed by a recovery that will not go in a straight line. Recovery willhe be a little bit less than the slope when we had the activity drop and the end result might be a little bit of a loss of activity in certain sectors. What i want to emphasize is that it will depend very much on the sector. It will depend very much on the region. There will be a wide variety. Sectors will s. Erience some ws, some u there will be a lot of diversity in terms of recovery. Matt which sectors do you think well have the best recovery . I think sectors like the i. T. Industry are experiencing good results. Some other sectors that would be in trouble are hotels, airlines. There is nothing really surprising about it. I think there also might be a little bit of a gap between the supply side of the economy, the production, and the consumption. For example, this is something we have observed already in the chinese data this morning. Do you mentioned technology. One of the themes a lot of people interested in tech are , office space, cars, i wonder whether that kind of thing goes out the window with the virus. Other parts of technology. Education technology. They are the ones that do well. I guess you have to be selective. Absolutely. I could give you another example. Telemedicine, i dont think we have ever used as much as we have recently every it as we talked generally, it has accelerated some trends that were already in place in the economy prior to the covid19 crisis. I could mention three of those. I was already mentioning digitalization in the use of technology. It was a First Experience and it works. A concern about sustainability is a very important thing. There are already some scientific studies done to show the relationship between the climate situation. Last, but not least, it will reaffirm the emergence of china. It had obviously started with the dispute on trade, but i think in the year of a president ial election, this is something that is going to accelerate in 2020 and beyond. Matt let me stop you there because we are going to talk about, im going to bring you back in a moment. Im going to talk about the interesting region alipay. We will talk about german gdp. Of Bangka Lombard oda stays with us. The German Economy could see the worst drop in gdp since 2009 for the first quarter. We will look ahead to todays data. This is bloomberg. Erg. Matt welcome back to the european open, just under 40 minutes to go until the start of European Equity trading and u. K. Equity trading. Ftse futures up 1 right now. Cap and dax futures up as well. So, we do see gains here. We get a reading of german gdp this morning. By the most since 2009. Germanys export reliant model was already creaking before the pandemic. , the cio atier banque lombard odier, is still with us. What do you think about the german reading . It looks back looks bad. Bloomberg economics thanks they can easily borrow money, invest, and make it through unscathed. Stephane absolutely. People are ready to pay them. What is very important in this regard is that they have a good use of money and they invest in their infrastructure. I. T. And health care. They improve going forward. A sector that is going to have a lot of difficulties going forward, but they need to reinvent a different model going forward. What kind of highfrequency data are you looking out when it comes to the euro in economy. Lifting lockdown measures and what impact that is having on the ground . Tophane so, in order evaluate and which kind of scenario we are vshaped, thisped, w or whatever data is very useful. This is thing such as air pollution, consumption. Inlook at Traffic Congestion the large cities. We look at data on mobile phones. Soon as you activate the tracking on your mobile phones, we can get a sense from telecom operators, what is the mobility of people . To economica points activity which is picking up or the first area where it picked up in asia and china more precisely. We are starting to see signs and europe of picking up of people mobility. A bit more Traffic Congestion in the cities. A bit more air pollution. About commuting to work. When i come to work, there are a bit more traffic jams. Matt let me ask you about europe right now. I know your strategy is to rebalance away from europe into u. S. Stocks. The main reason why we rebalance away from europe is sector allocation. Indices haveu. S. Much more industries that are industries of the future. Lower. Ere little bit where we dont see such a good future. Anna thank you very much. We just had numbers coming through. Precision engineering business. Q1 income dropping by 89 yearoveryear. Also because apple is their biggest customer. Hard to see on tv, but an interesting function. Matt my favorite. Anna thanks to Stephane Monier for joining us. We will talk about the fight around the vaccine for covid19 coming up here. This is bloomberg. Welcome back to Bloomberg Markets, this is the european open. Let me tell you what you should be watching for today aside from the equity open. The third round of brexit talks between the u. K. And the eu is due to come to a close today. Euro Group Finance minister meeting. Oniewing the progress made economic safety nets agreed to at the april 9 reading. When we get filers. We will be keeping all of our eyes out for u. S. Retail sales and Industrial Production data today. When you say 12 00 p. M. , i always struggle. It always takes me a minute. If you just say noon or midnight, it is so much easier. You know . Anna it is. We will try to keep it straight forward the future. Lets turn to much more serious matters. The fight for the vaccine seems to be pretty ugly. Company ceo suggested the u. S. Could be in line to get hold of the drug first. Sam, great to have you with us. Virus nationalism seems to be something that is present in this debate. Others talk about the potential for the vaccine as a public good. Where did we come down on this argument . How have you been thinking about this . I think there needs to be a lot of emphasis on a whole host of people in the room to deal with this. It is such a complex situation. We are arguing about who is going to get the first dose and we dont have a vaccine that has shown efficacy. This is going to be the most complex thing the world has to solve and, unfortunately, it is going to get uglier before we get a solution. The challenge is this. I mentioned the first time and i have to say the ceo of sanofi is an outspoken person, a straight talker. Whether he specifically meant the u. S. Will get the first doses are not, but he has been one of the few who has constantly said it is not about getting the vaccine first, but the bigger challenges is getting the manufacturing scale up. Imagine you get one, who do you give it to . What do you do with it . You get 500 million doses . Who do you give it to . Part of your nation you vaccinate . You know, developing a costly is also a endeavor. It costs one billion or half 1 billion. The reasoning for getting the u. S. Hade was that the put its money where its mouth was. Thead invested and taken risk, earned the reward. On the other hand, our colleague on the Bloomberg Opinion side points out that the french taxpayers also give 150 billion terms of taxt in benefits. So, who is chipping in the most here . Sam who knows . How do you calculate these numbers . With the u. S. By grant giving bodies have been giving, it looks like they may have been the first to hand out that money, but then you go to the u. K. For example, you have the institute Whose Research is funded by charities in the u. K. You come to france, you have the same thing. The problem is, lets forget this discussion between the u. S. And europe and u. K. , what do you do for africa . What do you do for middle east . What do you do for a whole host of Asian Countries who have not had the opportunity or need to fund any of these things . Do we just ignore them . Obviously, 1 billion of development for a vaccine is a large number for today. Manufacturing will cost a multiples of that going forward. Companies areical very profitable, good, strong cash generating businesses. They canhis one time prove their worth to society by developing a vaccine and literally giving it to people and allowing it to be used at least for the pandemic at a cost base. Sorry. I know that some people are looking at the hiv example in the different deals on pricing. Worldfferent parts of the , you said Something Interesting about production. Production facility be ramped up now . Even if we dont have a vaccine to produce . Should they be ramping up production at this point . That is a great point. That is exactly what the company doing. I think that is happening. Im not sure how much the governments are involved in this, but that has been happening. Governments dont own manufacturing facilities. Fund the can do is to cost of running some of them or switching some of them. If companies have to switch manufacturing from their current products they are using to manufacture the vaccine, they are losing profits somewhere else. All that has to be taken into account. But this equation has to be solved with everyones involvement. Thatant just assume everyone who puts the first bit of money and gets the first to go. That would be the ugliest thing humanity has done in a long time. Although it probably would not be the first time. Sam fazeli, thanks so much and for joining us. Bloomberg intelligencew director of research for em ea. Already an incredibly hot debate that will certainly come definitely continue. We hear trump talking already about pulling production of pharmaceuticals out of asia. He is not the only one, of course, talking about that. Up next, and other debate. Luce is going to quadruple josh lufthansa is going to lufthansa is going to quadruple flights next month. Next. This is bloomberg. Matt welcome back to Bloomberg Markets, this is the european open. Just under 20 minutes before the start of european cash equity trading and in the u. K. Deutsche lufthansa will quadruple flights next month as the restrictions these. They plan to operate 1800 roundtripper lights per week in june versus 400 right now. The number of flights they are offering would usually total the daily per week. Down obviously scaled dramatically. Let me ask you first off. Will the need to cross borders intrigue europe next month . Does lufthansa still have enough money to operate by june . It is going to be a mix of flights. A lot of them will be shorter haul flights. It might sound impressive they are quadrupling flights, but quadruple in from nothing essentially. Almost the entire lufthansa fleet, like most around are on the ground. Graduallyre trying to ramp up again. This could go either way. Either people respond positively and that helps them generate revenue or they find they are operating almost empty flights and they continue to spiral out of control. Will they have the money to operate . That is right now, the big debate. They are burning through a lot of money. They are in lastminute conversations with the German Government for a bailout to the tune of 9 billion. Lot that they need if they want to make it longer term. You whatant to ask Lowcost Airlines in particular make of this. Ones that have not received government support, what they have been saying. Im going to read what Michael Oleary said in an interview yesterday. Lufthansa is getting state a likely drunken uncle at a wedding. Mine sweeping. You can always rely on Michael Oleary for the best quotes. Is a game being played. We are not asking for aid and the others should not get it either. And very civil terms, he is saying, let them die. He does not want to see the of thisng Airlines World to get these massive bailouts. The number in total he has put in it is 30 billion euros. We are up against a 30 billion euros money pipeline being given to these companies and that is just not fair. He is saying, let them go, we will pick up the pieces, this is unfair competition and he has taken it as far as going to court and suing over some of these bailouts. Whether he will be lucky or not, that is another matter. Very political debate going on. Most countries dont want to see their National Carriers disappear. Although, it is pretty easy to understand why he would. Fromles prohibit states giving companies unfair competitive advantages. Surely, if you allow them to continue making losses, even affairs that are unprofitable when they should have gone bankrupt to begin with, that is a pretty unfair advantage. Ryanair doesnt offer the same kind of service that lufthansa offer video need to fly with that airline. They are there for business short haul and longer hall trips. Forgetting toe mallorca and that sort of thing. It has long been you guys get out of shorthaul, we have that part of the operation covered, think you very much. We focus on longhaul, but do have to see consolidation in that market. That is something he has set for a long time. In some ways, the virus and the fallout is just sort of end accelerator of that trend. So, we shouldnt see the likes of lufthansa, air france compete on the short hall routes. That is where they really are the most efficient. He would like to squeeze them out of that market. He is not really into the longhaul market. That is not what he is interested in. He wants to split the industry into these two camps and that is something he has set for a long time, that they shouldnt waste time on shorthaul. That is what they do best. Anna thanks very much for joining us. The latest on the aviation story. Googles eric schmidt says that china should have alerted people more quickly about the spread of the virus. He spoke to David Rubenstein on leadership live about the hunt for a vaccine. When the chinese outbreak occurred, the chinese public showed a map of the virus. Very quickly like the road institution in america was able to identify where the receptors were. With that information, you can now go find a combination of the proteins that will go and basically stop and start this process and that formed the basis of the vaccine that is in phase one trials and it is some of the basis for phase two trials going on in china. The government did one thing well last year, which is it created something called barda which is essentially an advanced Research Agency for this thing. Doingthropists have been prebuying and getting things ready for vaccines. The problem with vaccines as you have to first test that they dont hurt the host. Second, you have to see if they actually produce anything. The third is you have to see if they actually have an impact. You can speed that process up, itu cannot speeded up normally takes five or 10 years to produce a vaccine. If we did come up with a vaccine or someone came up with would we have enough Manufacturing Capabilities to get vaccines for everybody . Most people could look at this stuff and have concluded that eventually yet, but not in the short term. Agreementniversal that the vaccine should first be available to healthcare workers, people most at risk, and people like people who are in nursing homes. The places working in meatpacking facilities, where there is a high probability of transition transmission. My guess is that there will be a vaccine within 12 months or so and there will be a big fight over who gets it. I have funded through various maneuvers ideas and projects to think about how to do that ethically, but that is a problem we will face when we get there yet there. Because the vaccine does not mutate or the virus does not mutate very much, there was a hope the vaccine will actually work. Many of the companies stocks of gone up which are thought to be producing a vaccine, but who will own the vaccine. Will the u. S. Government own it or will the world on it . I think most people believe that the companies will essentially run nonprofits for the first period, that is the presumption. I will imagine that the government could pass a law that under force majeure could force the intellectual property be published. Because it is likely this is not going to go away, it makes sense to allow these firms to own the intellectual property. You are going to want to be vaccinated in the future. It is not obvious to me that the government should just take the vaccine from the inventor in some sort of brute way. It might be better to have a more clever strategy. I want to scenario that this is more than 12 or 18 months away. And if we cant get things restarted there is a normative amount of pain in our society. Has been done to our travel industry and the airlines is surrendered us. It will take a decade to recover if we dont do this carefully. The chinese onto anything related to technology . Should they have done something differently to deal with the problem and alert more people to it . Or do you think they did what they could do . As i understand that, there is a lot of fault going around everywhere. The chinese should have alerted people more quickly. They eventually did. This is a simple test. If something is doubling every three days, how do you get ahead of it . If you look at the countries that have done well compared to the countries that are in trouble, which includes the united states, they all had one point, they all acted extremely quickly when they saw this wave coming. America did not. China did after a delay, but that delay hurt. That was googles former chairman and ceo eric schmidt. Now heavily involved in government and nonprofit work. Global deaths from the coronavirus are now 300,000. While cases continue to fall in europe and the u. S. , china has a new outbreak, a second wave with which to contend. We will get the latest next. This is bloomberg. Anna welcome back to the European Market open. U. S. Futures actually fairly flat this hour. Lets get the latest development on the coronavirus. The global death toll now exceeding 300,000. South korea and china are back on the radar. Officials are alarmed over a second wave coming through in asia. In the u. S. , states have been issued official guidance on how to reissue bars, restaurants, and workplaces. Annmarie hordern joins us live in new york, but focusing on this globally. What is the significance of these new guidelines in the u. S. . What is the significance of what we are hearing . Annmarie well, these guidelines have really become a political football. Earlier this month, the first version of these guidelines were rejected by the white house, saying they were to prescript. Right now, the cdc posted these guidelines. A lot of states have already been following these guidelines. It is all the things we have been talking about. What do you do with mass transit . Transmission areas. Before increasing to fullservice. Manhattan, long island. Those will still be locked down for the foreseeable future. Matt the New York Stock Exchange will eventually open up again, right . Annmarie thats right. May 26, partially reopening. Traders and masks. They said they could do this now. They consulted with a lot of health officials. That is one potential green shoot at the end of the tunnel. Matt thanks very much for joining us. Annmarie hordern in new york city. Coming up, we have the market open across europe and the u. K. Futures are pointing higher to end the week. Gains on the ftse and the dax. Cac futures not quite as high. It looks like it could be a risk on morning. This is bloomberg. One minute to go until the start of cash equities trading. Global deaths from the coronavirus reached 300,000. While cases continue to fall in europe and the u. S. , alarm is growing in asia over a potential second wave of an infections. Slower returns in normality. German gdp numbers come out today. A meeting between the french president and the drugmakers ceo is scheduled for next week. Meeting i dont think i would want to go to. It seems like there will be tons. Lets take a look at futures, up 1 . Ftse futures gaining a little more than dax futures, but it looks like they will make what theyt some of lost yesterday. Markets, equity indexes opening up out of the gates, the ftse up 0. 4 , moving up a little bit higher as the pound comes down. You can see the red box slightly to the left, the pound falling. That typically drives up u. K. Equities. 0. 8 . Ex up by cac gaining 1 as well. It does look like continental indexes and the ftse now more than 1 , gaining to start this session today. Investors are buying debt right now. They are buying bonds. They are buying swiss, french gilts as well, at least two year u. K. Debt. But they are buying stocks this morning to the tune of about 1 . European markets are higher. Global stocks are still headed for their first weekly drop in three for the whole week. The picture has been more red than green because of concern about the coronavirus. Joining us is ellen higgins, cio. Does everybody have the right plan to reopen the lockdown . Can they reopen quickly enough without encountering a second wave or without driving infections up . How do you see the situation right now . Guest good morning, matt. This is very difficult. Who knows . Certainly markets will be incredibly nervous going into next winter. Everything we read indicates we summer,e ok before the but it is so tentative, the seizing of the lockdown anyway, because for example on the key social distancing, official World Health Organization whereases is one meter, here in the u. K. It is two meters. Tend to be on the conservative side, with the exception of sweden, which is arguing they would be conservative in the long run. Anna good morning to you. I was conducting a blog yesterday on the bloomberg, a topline blog, and it was about the aviation sector. I was asking analysts when they saw capacity returning to 2019 levels. Some said not until 2025, and some analysts were saying earlier than that, but around that period. That is a sector that is incredibly affected here and others will be a lot less affected than that. Given some sectors will be weighed down with that kind of timescale, what is the path out of this . What is the trajectory of recovery for you . Some in terms of gdp, initial euphoria as we all get our haircuts that we badly need and we go to restaurants that are opening in australia. Some initial euphoria, then slow because we have this social distancing, and what we believe is even when we come through this, and it is i cleat to be a matter of time, there is likely to be a buildup of savings ratios in the personal sector. We see that time and time again after crises, and this has. Been ratio among the consumer. It is hard to see corporations really winning through in terms of spending. However on airlines specifically, i do remember after the tragedy of 9 11 all kinds of statements saying it is never going to be the same again. Years, wewithin two were socalled back to normal. What i would say is it is quite hard to change human nature. Inhael oleary and ryanair, terms of our altercations, might be in a better place in the long haul because longhaul business, as we are doing today remotely, whether it be over the phone or zoom, etc. , you can see some changes there. But it is very hard to change human nature. We saw that in china when the first day that shanghai opened, there was the real euphoria. Another example i like, the crude sector, which is right at the center of some of the tragedy, looking for 2021 40 up from 2019. Socalled shorthaul Airline Sector might be somewhat better, come back quicker than we might think. Matt dont you think there are going to be some permanent changes here . Talkingdeaths daily, about leaving a lot of bankers to work at home. The governor of connecticut saying the commute to wall street might be over, or at least it will not be five days a week. Isnt that going to change a lot of things for example for commercial real estate . Guest definitely. We wrote about this three or ago. Weeks this is applied to virtually every country. In Retail Sector has been depression and remains in depression. That is very difficult. The only upside is conversion to residential. Contrast, warehouses are buoyant and remained buoyant. What has been very steady have of placeces, the kind that barclays has. I think you are right. Changek that is going to in the sense that it is pretty hard for them, these big companies, to get out of their current leases. But the idea of going bigger seems somewhat remote. What we are thinking of i dont know if you have been down to the iconic address. That has been pretty crowded and has always been good for events. Maybe offices will be in the future even more focused on , internally for staff, but also externally for clients. A bigger event space. Buildings will adapt, but commercial real estate, i think you have hit it on the head. That is one sector that will surely change. Thank you. We have talked about the lack of need for a big Disaster Recovery premises. Stay with us. Alan higgins. Coming up, data distortion. The number of americans seeking Unemployment Benefits stays in the millions for an eight week. We will talk about the u. S. Economy next. This is bloomberg. Matt welcome back to Bloomberg Markets. This is the european open. We are 10 minutes into the session, and it looks like a pretty positive friday. Right now, one point 6 gains on the ftse and the dax, but it is still going to be a down week. Lets get the Bloomberg Business flash. Here are the top corporate stories for you from the bloomberg terminal. The possibility that there might be unequal access to a potential Coronavirus Vaccine from sanofi has turned into a huge debate. The french finance minister says it is revolting against a suggestion from the chief executive that the u. S. Gets the. Irus first sources tell us Emmanuel Macron plans to meet with Company Officials next week to give them a beat down. Warning of grave economic consequences that could last up to three years. The maker of cartier jewelry is giving one of the most pessimistic outlooks in the luxury industry. Operating profits slid to 22 , the lowest in nine years. The company says it is impossible to make any meaning forecast. Bt is in centering selling a stake in its network unit open reach. That is according to the financial times. Ae newspaper says there is potential investor, alongside an unnamed sovereign wealth fund. Potential sales could value about 20 billion pounds. That is your Bloomberg Business flash. Anna . Anna lets get onto the u. S. Economic data we have had. The number of americans seeking Unemployment Benefits stayed in the millions for an eighth straight week. The data was marred by inaccuracy. Unemployment claims were reported as nine times higher than the correct number. That at significant distortions to the latest report, which has taken on importance as the pandemic upends the labor market. Alan higgins is still with us. We are pouring over initial jobless claims more than we have done. Do you see a structural shift in unemployment here, or will this be entirely unwound if a vaccine is found, when a vaccine is found, and we returned to Something Like a precovid economy . Guest it will be slower. You are right. Really incredible numbers today. It is interesting when that revision or correction comes in where, as expected but really elevated levels. Economic growth is the norm, it is natural to be employed. It does not seem it right now. You are right. When we do have a vaccine, then we should expect these people to get back to work. Also, there is a certain amount losses asry job businesses are temporarily shut down. But nevertheless, i go back to what i said earlier. There is likely to be longerterm scarring, a bit like we saw, maybe a more extreme version, after the Global Financial crisis. On remember, we kept going about the fact we had slow economic growth. The stockmarkets did well, but growth was slow. I think it will be the same this time. , whichlding of savings is a great longerterm protection for the economy, but in the short run, and i mean several years, it means slower growth. Unemployment will be elevated, but we will snap back as the lockdown eases. Will be ong snapback the vaccine. On the vaccine, a lot of people are saying it will take years. I think there will be eight euphoria about a significant discovery. That will matter less than the redistribution. It will be a slow process. After the great financial crisis a surge in income inequality. Thomas piketty made his name on it. It gave us things a lot of people would argue, like brexit, the afd, president trump. Do you think this is going to increase income inequality, and what kind of changes should we expect from that . Guest that is a deep question. You are right about 20082009. A lot of the job losses have the average Hourly Earnings number shooting up for people who remain in work. Is right,ates that but that would imply plenty of geopolitical risk. Right now, we are very concerned about italy, which is a slow growth economy. Same kind of argument that Emmanuel Macron sent out a couple weeks ago. Likely there will be more geopolitical issues. Very interesting, where will the u. S. Election go . Way, in terms of the u. S. Election, it should be on the side of look at how trump won. Trump won in the classic midwestern states from a lot of voters who were on the lower paid side. In that case, the republicans won with backing for lower paid workers from lower paid workers. Anna some of the politics may be with us for a long time. You said the economic effects could be with us for a long time. What does this mean for deflation . How low will it stay and for how long . Guest we have been a low path for years. Hard to see inflation. I know some people are worried about quantitative easing, but the evidence shows there is no relation between quantitative easing and inflation. The more subtle aspects, which evenss talked about, is with inflation, Interest Rates are ridiculously low even before this crisis. What i mean is the normal premium you see with inflation, inflation on the low side, normally Interest Rates would be three or four. They would be cut in an environment like that. What we have not seen the last few years is that sort of freedom. Countries have ignored any spikes of inflation. In the u. K. , we had a spike. Rates remain below 1 . Modest we do get a uptick in inflation, Central Banks will just ignore it. I tend to focus a lot on the u. K. , but i think this applies globally. I used to say i would struggle to see 2 rates again in my working life. Now i wonder when it will get to 1 . The great question is whether powell is going to go negative. For now, he says not, but that is just for now. Alan higgins stays with us. Coming up, we discuss our guests favorite picks and under the radar trades. Exclusivelyl hear from the opec secretarygeneral. Dont miss that conversation with mohammad barkindo. This is bloomberg. Andhe times are turbulent they are complicated. How quick will the recovery come . Off to a strong start, yet the uncertainty remains. It is very much of an asset, and we will remain cautious. I think it is too early to call an end to the globalized world. Ushapedhave a scenario, we could see it up to 1. 4 billion euros to yearend. Recovery. Ee we dont know exactly how the restart and the unraveling of the current lockdown across the world is going to work. There will be a time after corona. I always say to my people, the night is darkest before the dawn. Think about the future without forgetting what needs to be done now. Of germans a Number Company executives talking about the lockdown and their outlook for the future. Alan higgins is still with us. Lets get some of his picks. What strikes you as the most important strategy . Is there something you think when you wake up in the morning, i love this sector or this region . They are doing it right . What are you pumped about right now . Guest u. K. It is not going to be super sexy what i would say is a reminder that equities are very andduration assets, therefore it is normal to see a disconnect between the economy and the equity markets. Peopleainst maybe some a lot of people are saying equities are ridiculous. Put equities to one side. In this environment, keep it simple. What is the fed doing . What is the fed really focusing on . Investment grade and falling angels. If you put it simple, by what the fed is buying. They were overweight in Investment Grades. They tend to be modest in Investment Grades. We are talking about larger companies. What we are seeing is either direct bailouts, like with fthansa,r like lu or you are seeing Investment Grade. That is the way to go. Rallied in 20082 thousand nine. Credit was strong before equities. Banks doing central what they are doing and we get people saying Investment Grade credit is the way to go. What about the u. K. . I know you have more favorable views on where the brexit negotiations go than some of the other people we have heard from recently. Do we manage you said we would find a way through the fishing and the ecj roadblocks that seem to be weighing us down at the moment. Guest it has taken a bit of a , but we have had a fairly longstanding positive view on u. K. Domestic, which is currently brexit related. We dont run our whole strategy on one physical outcome. There is good value and good Earnings Growth in the u. K. We just think there is a deal to be done here. To beike there was a deal done, notwithstanding current comments in the u. S. And china. Europe needs a deal as much is the u. K. Does, especially with fishing. It is critically important in Key Countries like spain and france. On the flipside, british sailing to france and spain. Suggest there is a mini euphoria for u. K. Assets. Alongside Investment Grade in the u. K. , we like u. K. Investment and u. K. Midcap plays. Anna thank you for your thoughts this morning, alan higgins. He will be continuing his conversation with bloomberg on Bloomberg Radio at 9 00. You can find matt there. Africa maybe ground zero for airline bankruptcies. Next, we speak with the ceo of africas Biggest Airline, Ethiopia Airlines. Conversationhe around the broader aviation questions. This is bloomberg. 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. Anna welcome back to the European Market open. The session got open to a flying start. We are off our highs, but still up by 1. 2 on the stoxx 600 this morning. Sectorsgot all of the in europe in positive territory. Travel and leisure also very strong. In fact, just one sector in the negatives, real estate. Everything else doing very well. At the moment, the market focusing in on catching up with the market. Rally with wall street being turned into an early rally here in europe. U. S. Futures do look more modest in their expectations, more of a focus on the reinfection story or the second wave story and to what extent that will gain traction. That is a focus for investments globally. Everybody whoe to is watching right now, biting their fingernails and waiting to see if there is a second wave coming in china. Worried about a second wave in other places that may be reopening to quickly. Lets get the bloomberg first word news for you. Todays top stories from the bloomberg terminal. The pandemic is reviving the worstcase scenarios for the u. S. China relationship. President donald trump says he doesnt even want to talk with his counterpart, president xi right now. U. S. Would save money if it cut off ties with beijing. It is unclear how he means. This comes as chinas post lockdown recovery gains see factory output rising better than expected. As we said, concerns about a second wave. France is set to unveil aid packages for the Airline Industries. The government has promised 18 billion euros to back the tourism sector. This comes as france moves to restart its economy after loosening lockdown restrictions. Renaud haveklm, and already obtained billions, but operations remain depressed. There are few signs of progress in brexit talks. The latest round of negotiations today, and a ends stomach block are the conditions the eu wants the u. K. To accept. Before around of talks june meeting to discuss whether or not to carry on. The british Prime Minister has threatened to walk away if there is no progress by then. 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. The former minneapolis fed president spoke with Bloomberg Television earlier share his view on the Central Banks response to the crisis. He is currently an economics professor at the university of rochester. Powellsairman assessment of the economy is unfortunately exactly right. We dont know the numbers from april. Report weat the labor were getting from may is looking even grimmer. We know the numbers, we know there are risks to the downside as we move forward about how fast the recovery is going to be. All this, i agree with the chairmans assessment. Wasink where my colleague aiming at was we have these situations. Even the modal outlook looks bad. Why not roll out everything youve got available right now . Like trying to flatten the yield curves down close to zero, and i pushed for and harvard has said this as well, trying to explore ways to push Interest Rates along the curve even further below zero. Reporter reporter i am curious, isnt there a general perception here in the market that to a certain extent the fed is already doing that . The idea of going to zero, whether you do it in terms of taking yields down to zero, or you take some of the measures the fed has already put out there, that seems like it could be the same effect. What i am saying is it doesnt matter if we go to zero on a nominal basis or continue doing with the fed has done so far. Guest i think the fed, if it sticks i think this is why some of us have been calling for the fed to explore rates because if you treat zero as the lower bound, there is not a lot more room. People talk about Balance Sheet policies. The game plan is to push down on longterm yields. There is just not a lot of room there unless you start to take seriously the idea we can go negative with yields. Is again, the situation is i joined the Federal Reserve as a policymaker back in october 2009. I thought the situation was dire than with the Unemployment Rate at 10 . This is much worse. I think it calls for the fed to be doing what it can with the tools it has now and really saying openly we are exploring ways to make those tools even more powerful by being willing to push Interest Rates negative and even deeply negative. An unprecedented crisis requiring an unprecedented response. When you look at the dual mandate, explain how lower or negative rates can help a central bank get more people back to work. The bank of japan has had negative rates and it has not exactly resulted in a hiring boom. Guest the challenge is what japan has done is what i call shallow negative rates. They have gone a little bit below zero. I think the situation both in europe and japan is better than it would have been in the absence of their doing that, but it really means you have to be thinking about ways to go even more deeply negative, trying to decouple the interest banks are earning on reserves from what people are earning in terms of cash. Why is this helpful . Why is it effective . Is thefeds interest reserves in banks go negative, they will be willing to bid up prices and bid down the yields of securities in the marketplace, like Mortgage Backed securities. They will be willing to make ofns on cars and other kinds secure lending at lower Interest Rates. This will stimulate spending. Was the former minneapolis fed president making situation in the europe could have been worse if there had not been negative rates. There are productions that africa could be ground for airline bankruptcies. We will get inside aviation conversation with the ceo of ethiopian airlines. This is bloomberg. Back to thee European Market open. Equities catching up with the u. S. , showing decent gains this morning. Lets talk about the aviation sector in africa. It is protected that airlines are facing a loss of 4 billion in 2020 in terms of their. Due to the coronavirus pandemic south africa is the most vulnerable country. A 2. 3re lines faces billion black hole. The Biggest Airline on the continent, Ethiopia Airlines, is seen losing 300 million in sales. Joining us now is tewolde gebremariam, the Ethiopia Airlines ceo. Good to speak with you today. Can you tell us what kinds of cuts you are going to be making to the size of your airlines in terms of jobs and aircraft . How much smaller do you envision it being . Good morning. Program. Be in your this coronavirus has caused unprecedented global crises all over the world in all sectors, but i think the Airline Industry is the most affected. African Airline Industries also are highly impacted, more than the rest of the world. Dollars oflion u. S. Revenue is expected to be lost between february and the rest of the year. Yes, we are also highly affected as the Largest Airline on the continent. Could africa be ground zero for the bankruptcies that is predicted . Do african governments have the resources to bailout their airlines the same way europeans are . I am afraid i also share the view that African Airlines will be among the hardest hit by the impacts of covid19. In fact, it would be because on one side there is a lockdown almost on the entire continent, so almost all airlines are grounded. On the other hand, the lockdown costusing more economic than human cost. As you know, the human cost in africa is relatively smaller so far. But the economy cost will be much higher because the lockdown has caused tremendous economic hardships to many countries. On the other hand, Commodity Prices have gone down. Countries exporting will face further difficulties. Put together, i think african countries and african governments will not be in a position to Bailout Airlines as much as europe and america. Governments are not in a position to help. Banks lending sufficiently to the Airline Sector . Guest we see that banks are a little reluctant to lend to industry in general. Becausearly in africa of the two main problems that i mentioned. Number one, airlines are not flying and not generating revenue. On the other hand, governments do not have the resources to bailout their airlines. Initially, africa is a developing economy, so it is already a weak economy. Slump, with the oil, because africa is dependent on exports. Difficultit extremely to support their airlines. It is going to be very tough for most African Airlines. Do youuickly, when expect traffic to return to normal . How long will it take for a full recovery . We are predicting a year back to 2019e levels. We have a slightly different view here in africa. Slightly faster in recovery because, especially the eastwest part may recover. I mean between africa and asia, particularly china, india, the big economies. While for other countries it will take longer, we also expect the african dias brought the ora to have ap faster economy. Otherwise, our prediction is 39 below at around 2019. Thanks so much for joining us. Tewolde gebremariam, the ceo of ethiopian airlines. Of namedican ceo best African Business leader. Great to get his take on this industry. Next, dealmaking after the lockdown. Goldman sachs sees m a bouncing back in the second half. We discussed opportunities for private equity. This is bloomberg. Matt welcome back to the european open. 50 minutes into the trading day, looking at gains for this friday of more than 1 . But it looks like equity indexes will close the week with red arrows. Dealmakers expect a rapid rise in activity in the second half of this year, forecasting to vested tours and all stock deals could lift the worst takeover slump in years. With economies reopening, the head sachs says ceo and boards are thinking about making deals to shore up Balance Sheets. But what opportunities are out there for private Equity Investors . Lets talk to one right now. Nikos stathopoulos joins us now. Pleasure having you here. I will tell viewers that you focus on regions greece and italy, as well as certain sectors like telecommunications and media. But you also have a divergence of assets and italy. They got their stimulus package through yesterday. Was so how that region hardhit. Guest good morning. It goes without saying that italy has been one of the countries most severely impacted by this pandemic. The European Commission has suggested that italys economy may shrink by 10 this year. It is encouraging to see the country is beginning to emerge from its lockdown and this stimulus package has been approved, which will provide welcome support for businesses and individuals. It also comes in addition to other support schemes for the government and italy like other countries have introduced. Italian businesses have strong fundamentals, and management teams will help them rebound. With some of the store openings or shopping malls or other venues that have been brought forward in some regions, this will help restart the economy. It seems that italy is reaching the ending here. Anna the end of the beginning. Given in your view that we are reaching the end of the beginning . Is it still about ensuring liquidity for companies, making sure everyone has the Balance Sheet they need . Or are you thinking about the opportunities that lie ahead . Guest i think we strongly believe that any activity at the moment, any investment activity, has to be balanced very carefully against protecting the assets we own. The absolute priority for us and most of my peers is to protect any vulnerable companies. Is with 2020 have being a challenge year from an economics perspective, do you invest and how . Pricing risk in this environment remains extremely difficult. If, when, and how to invest when all indicators are pointing to a recession this year and maybe even further. We do at the moment see some activity. We ourselves and some of our peers are seeing activity in a few areas. I think we will see several things happening. For example, you will see investors from large corporates being debated. You have rescue financing from industries that have been more severely impacted. For instance, Even Companies like Virgin Atlantic are looking to raise capital from private equity firms. You see mergers i could create opportunities where private equity could be a catalyst, or we could be a provider to facilitate the mergers. But we also are seeing a growing enthusiasm from the firms taking minority stakes in businesses. Is investments in airbnb. We are looking at situations ourselves. I think this is an Interesting Development for the industry, and is an upper unity an opportunity we can find todays environments. Private businesses would not look at private equities for money, but we are raising money in capital markets. Private equity has become a very successive source of capital. Matt what about sports . The biggest concerns are about the lost of human life and livelihoods, but i think a lot of people are missing sports. Football canceled, just getting back to starting again in germany. Can can you do and what private equities do in terms of taking advantage of the appetite that has developed for sports . Is a very interesting sector because a couple ways we look at Investment Opportunities at this moment to build conviction is to look at sectors that have been heavily disrupted by this crisis. And i think sports is one of them. It has a unique and valuable content. It has diverse ownership structures that many stakeholders from broadcasters to players, they have distribution platforms that will be affected by this. I think this will be a sector where you see private equity having a look at. There have been rumors that some of our peers are looking at investing in football leagues or rugby leagues, or even specific clubs. I think our industry will increasingly play a role in this sector, and the disruption of the sector will provide more opportunities. The other way we look at these is by looking at sectors where they have demonstrated strong telecomce, which is the and media sector. Matt and of course, that is your focus. That is a sector a lot of people are betting strongly on. We will have to get you back on at some point to talk more about this. Nikos stathopoulos talking about opportunities during this crisis. Thats it for the european open, but stay with Bloomberg Television. Surveillance is next. This is bloomberg. Francine not buying it. That data shows pandemics even when shots get back to business. Debts from the virus top 300,000. Officials in tokyo make plans to reopen the economy. Also coming up, Emmanuel Macron berates for insisting the u. S. Has very vexing. The drugmakers