S officers says stimulus is on the way. Euro german bailout. A. M. Has just gone 6 00 in london. I am torn between the debate on whether the u. S. Chinahong kong it the backstop of central bank the narrative that drives this . Japan reopening, australia is reopening and normalizing as is the u. K. Good morning. Expectations of expansion of stimulus for june. They seem to be gaining some momentum. The market seems to be putting a side the u. S. And the u. S. China tensions. That simmers in the background. We still see this risk on an markets. And perhaps added to the story a little bit of optimism or less pessimism. Like the bailout and we getcept the news like the bailout of lufthansa. Futures pointing to similar gains that we saw in the euro stoxx 50. The 10 year treasury yields higher. Is above 34 a barrel. Iae saying demand could get back to precoronavirus levels. The number of coronavirus deaths in the u. S. Is nearing 100,000 344 global deaths around thousand. However, u. S. President trump is threatening to pull the plan for the Republican National convention in North Carolina if the governor does not allow the party full attendance regardless of coronavirus restrictions. Joining us is a bloombergs Annmarie Hordern from new york. Have two different approaches in the u. S. As we head towards the election a mid the pandemic. What is the president saying . Gape are seeing a stunning between the republicans and democrats regarding the upcoming conventions. A huge Election Year. President donald trump is threatening to paul the rnc, the Republican National convention, from North Carolina if the governor of the state cannot guarantee that the convention would go on as normal with tons of crowds. That puts the governor in a sensitive and delicate position. They arethat right now following what science officials are mandating. What North Carolina has been doing is it has eased some restrictions. 10 people per gathering and no more than 25 people outdoors. That is it for now. There is a question as to whether they will be able to hold such a large event and the president is threatening that if they cannot come he will move the rnc somewhere else. A different picture on the other side of the aisle. The democratic National Convention is scheduled in milwaukee in august but they openly say we have to do things differently this year and we may have to go virtual. Manus a variety of decisions. Let us talk about the tail risk. Lam defending the security law today. Progress the relations . Is solid Legal Foundation for the new legislation and it is a different text. She says she rejects the Foreign Government criticism. We have seen a number of Foreign Governments come out and criticized the bill. The fact thatng there could be retaliatory measures. On sunday, the scenes were reminiscent of how we ended 2019 in terms of protests in hong kong. This will add fuel to the fire. We have an Election Year in the u. S. Beijing,ric between washington with hong kong in the crossfires in the crosshairs will become more critical. There has been concerns regarding human rights and the Financial Community its question is what will this do to hong kong in terms of its appeal and its position as a Global Financial center . These are questions that are are rising and carrie lam throwing her weight behind that which will likely create more fuel to this writer than we have already seen. Hasa even though china tried to reassure hong kong that its judiciary would remain independent. Let us turn to the u. K. My first question is will i be able to go to a salon . Im sorry. Have learned that england is going to ease restrictions. May i go to a salon yet . Alreadyet but you are looking so glamorous on television every day. The first restrictions will open up june 1. June 15 then is when we can have other outlets. Like selling clothing, furniture, books and electronics. Auction houses, indoor markets. Governmentwhen the is on track to lift some of those restrictions. This they want to protect shoppers but boris tonson is urging the brits get out there and spend money. I have to say a lot of this is being overshadowed by the Political Drama taking place at 10 downing street. We saw that front and center yesterday when we were working. Absolutely, i think the whole of the u. K. Was tuned in. I will stay out of the salon home depot kind of debate and carry on. We are reopening as well here in dubai. Shops have reopened. Gyms will reopen. Everyone is trying to get back to normal but that is a question what is the new normal . We have the first word news. His most Senior Advisor is refusing to quit or apologize. Dominic cummings has dismissed claims that he broke locked down rules that he himself helped write. He confirmed yesterday that he drove more than 250 miles to durham to seek child care for his child. The Prime Minister has backed his advisor but has expressed regret that the episode has caused. France is setting measures to support the auto industry. The first european government to do so. The french minister has indicated that the plan will cars and stepped up efforts to develop a new battery. Nissan and renault have shelved their plans to joint. They say they want to first recover from the pandemic. Both carmakers will announce restructuring plans this week. The companys are planning substantial cost cuts that could cut thousands of jobs. The coronavirus pandemic has shut many airlines. It would allow latin americas Biggest Airline take aim operating as it works out a plan to repay its creditors. A over 2part of billion deal. 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. Nejra, what have we got . Jra coming up, tensions heating up as china condemns the u. S. For blacklisting 33 of its firms. We get all of the details next. This is bloomberg. Manus this is bloomberg daybreak europe. I am manus cranny in dubai. A quick snapshot of the markets. A risk on sentiment. There is discombobulated and geopolitically between china and the u. S. Asia is flying high. Japan ends its state of emergency. Date ite line of the the s p futures are above the 200 day moving average. This is the death zone of the bear market rally. This is where they go to die. Stoxx 50 up. Have a look at oil. Absolutely storming away. As we see the worlds balance being reestablished in a market that is battered and bruised to say the least. Nejra, good morning. Nejra good morning. China has pushed back against the blacklisting of 33 of its firms by the u. S. The Foreign Ministry has described those restrictions. It is the latest sign of a rapid deterioration in tensions between the two nations and this is after the foreign minister said the u. S. Was pushing relations to a new cold war. China is seeking to reassure hong kong that its judiciary will remain independent under a new National Security plan. The plan has been fueling will lose oneit of the Key Selling Points of international investment. Luciana generally is with us. Us. Uciano generali is with what benefit does china have by disemboweling a destination like hong kong for asia . Luciano that is a very good question. That there is no straightforward answer to that , overdo think that china the last six years, has been going in the direction of a more monolithic state organized country. That the opening up that started in the early 1980s and that longation wait has come to an end. And so i think that obviously here he needs to control his base and i also think that this issue of hong kong will drag on for quite some time. I dont think this will be over very soon. That china is now kong inputting hong line with the rest of the country. And i also think that globalization as such is also over so you will have different hosts competing with one another, then probably small city states become less important in a less multilateral , globalized world. Those city states may become less important. Tk to great to speal you today. If you look at equities on a headline level, greed does not seem that evident that how much potential do tensions between the u. S. And china have really show up more fear in the market . I would say that right now people are totally focused on the covid threat getting under control and ignoring macro threats and geopolitical tensions. I do think when the u. S. Election Campaign Comes to the front, and it is difficult time exactly when that will be come anywhere between july and september, then i think that mr. Win theho can no longer election on an economic platform, he will morph into a war president to galvanize his base. I think that is a moment when we will see real concerns by the market. Also Health Crisis might look much more under control. That will shift the attention. I think it will happen though when mr. Trump becomes more desperate to win the election. Then he may do things that will upset Financial Markets more than what is going on right now. Manus one of the things that the market is focused on overt the Chinahong Kong story is what is happening with the peg. Many times it has been tested and many times it has been defended but we look at the differentials. This reflects back to levels we have not seen since the late 1990s. 1999 to be specific. There is a risk that the peg goes and if there is more pressure exerted on the peg, how much dislocation does that delivered to the asian currency space . Luciano i do think we are still now in this space of markets being relieved by the prospective end of the covid19 crisis. Rather be in the camp of shorting the dollar. I think we move beyond the covid crisis into a world where growth will be much slower which is typically good for the dollar. Deglobalizedinto a would see china having more problems at some depegn time needing to its own. At that point in time, i think that if hong kong will have oneted more into a countryone system part of china come that will be if people start seeing that, that is really going to be the moment of truth. But i dont see that right now. Of course, it is impressive that these futures are similar pricing similar concerns to what we saw during the asia crisis. I dont see that right now but medium to longterm come on i see significant concerns for the hong kong dollar as it really moves into this new china in a lized conflicted world with the u. S. Will Luciano Jannelli stay with us for the hour. One of the ecbs key policymaker is likely to boost the bond buying program. We will discuss that next. Trio jon ferro, and lisa abramovitz. Bloomberg tv like youve never seen before. 00 london time. Evaluating new headlines. And an argument or two over bonds. It is bloomberg surveillance on bloomberg television. This is bloomberg. Nejra this is bloomberg daybreak europe. I am narrative edge in london. Key policymakers told the paris conference there is room to rapidly and act powerfully. A signal the European Central emergency boost its bond buying program. He said it is in the name of our mandate that we will have to go further. He also signaled he would like to see limit to the current plan loosen even more. The next policy meeting is june the fourth. Is still withli us. There are High Expectations we will get an expansion of the stimulus coupled with the fact that there may be signs of compromise on the Recovery Plan on the fiscal front. And yet you are not overly positive on european equities bonds ifer on european youre looking at fixed income. Why . Thisno well, i think that covid crisis might be the catalyst for the European Union transforming in a much stronger time, entity and over that will be significant and that is what we need to monitor. When it comes to european assets, we have accepted or are accepting a pain trade in the sense that we think we are having now or going to have a world ofvery but to a Slower Growth. And if you look at european equities, these are mainly cyclical and value companies, they are not going to benefit from a world with even Slower Growth than we had in the last 10 years. In the last 10 years, we had slow Global Growth and we had Cyclical Companies underperforming. We are entering a phase of the even Slower Growth once we get out of this covid crisis. There will be a recovery. An opportunity for cyclical assets and european bonds but it will be shortlived. We are longterm investors so we dont want to go and try to find too much. So, if you have a slightly bearish view in terms of the propensity for growth, what does that do for a credit scenario . If you look at the matrix in terms of highyield, you are underweight in the u. S. When it comes to european bonds come you are neutral. And on highyield coming you are underweight. Imagine some i can i can imagine some spread tightening in the next few months and i can imagine a emerging markets doing a bit better but remember, manus , we are going to have in 2021, we will come to the realization that potential growth will have taken a hit again. There will be lower participation rates. Lower immigration. Resourcingg to have of manufacturing activities, Global Supply chains and what i would like to say is when you use the word bearish i am not necessarily bearish. I think high quality growth equityand structural stories, the disruptors, there is still a lot of potential there and in fact, we are not underweight equities. But i think that the cyclical and the emergingmarket, the european component, revival will be as shortlived as the recovery. But even a fast recovery manus we are going to have to put a line under there. Luciano will stay with us there. Talking through the rest of the markets very shortly. Manus good morning from bloombergs headquarters in dubai. I am manus cranny. It is daybreak european ago global stocks firmly in the green despite tension between washington and beijing. Carrie lam defends chinas National Security law and rejects criticism from forest governments Foreign Governments. Nearingonavirus deaths 100000 and Boris Johnson defends his aide. U. K. Juneeopen the 15. And the ecb suggests stimulus more of it is on the way. 9 billion euro government bailout. Daybreak ome to europe. Quite a bit of green on the screen despite the war of words between the u. S. And china. Our guest well as suggested that the market is only focused on the recovery post covid and the stimulus we are getting rather than the increase in tensions especially as we get closer to the election. Manus Christine Lagarde warned of w. War 2020 . To ask these questions. Let us get a snapshot of the markets. Ear market rally look at that. 3003. The last, grasping breath of a bear market rally. That is on the mliv blog. Nobody cares about the titfortat the twain the u. S. And china. Are we under pricing the tail risk . And london reopening the shops have ame minister look at the rest of the market on a reopening narrative. Back to beijing in berlin in terms of road traffic congestion. Dollar rose. And the pound no sign of the 35 year low for the moment. The 30th of june is the next big date for the brexit issue. Nejra let us get back to the coronavirus update. The number of deaths in the u. S. Is nearing 100,000 with global 344,000 however President Trump is threatening to pull the plan for the Republican National convention in North Carolina if the governor does not permit or the gathering of large groups. And carrie lam defending the beijing law and the u. K. Reopening. This is being overshadowed by the row caused by dominic cummings. Manus germany will offer lufthansa a 9 billion euro bailout in the biggest corporate rescue so far in the country. The package will see the government take an initial 20 stake which could rise to a blocking minority of 25 . The german finance minister schulz said state investment would be temporary. The timing of the exit would depend on the recovery of the country. Benedikt kamel is with us. What are the implications of this rescue package . But could be as much as 25 which is a problem for the government. They want to make sure they are not carrying the weight if the company does not recovery. They do not want to see a repeat commerzbank. Ank schulz said if we contribute this amount of money, we want to make sure we are not underwater on this. That was very important for the government to have that solid state. The next steps are for the Supervisory Board of moved on sign off on the deal. That may happen today or tomorrow or at least in the next couple of days. And then crucially, brussels needs to sign off on the deal. That is something that is not quite dry yet. We did hear some optimistic notes but we will see how that goes. Nejra great to speak to you this morning. On the question of brussels then , how might this proved to be a Sticking Point . Is lufthansa going to have another battle to wage in terms of slots . That seems to be where it is going. We know already there is quite a bit of opposition from other airlines, chiefly ryanair. Michael oleary has said this is not a fair Playing Field or an even Playing Field. These airlines are being artificially propped up with government funds. Thequestion is how might airline or how might germany make some concessions . A tool is slots. A valuable currency that use these slots at constrained airports like frankfurt or munich. If you have to give some of them up, that would help rivals. Angela merkel has said she does not want to see that happen. It will be interesting to see how this battle plays out between brussels and berlin. Who will get their way . We will probably see some slots go to rivals. That is the scenario we are seeing right now. At the same time, they cannot wait forever for this to happen. Nejra thank you so much to bloomberg Senior Editor bene dikt kammel. Markets andoutdoor car showrooms will be able to reopen from june the first if they can meet the coronavirus guidelines to protect shoppers and workers. The government said other nonessential stores can reopen two weeks later from june the 15th if the threats of the virus is under control. The u. K. Is launching a review into huawei. The move follows the u. S. Onouncement of fresh curbs the company. In january, the u. K. Decided to give huawei a limited role. Stake selling a sanofi is selling a stake in rajon rondo regeneron. It will sell shares worth more than 7 billion, the largest Public Offering in the health care industry. 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 chair of the Hong Kong Democratic Party says china should drop its proposed National Security law. Emily lau told us that most hong kongers want to have their views heard. Dropmily lau they should this National Security law which the rubberstamp parliament in beijing is definitely going to pass on thursday. It, stopould just cool it, and talk to the hong kong people come of Political Parties and legislators, do what is needed and what should be done and address the concerns of not just the Political Parties but the business community. Some Business People are rethinking their plans in hong kong. Do you not think that now with ons National Security law subversion and terrorism and interference with foreign forces, do you not think the companies and the professionals are not worried . Of course they are. I hope the International Community will tell beijing to really calm down and stop bulldozing this thing through. I do not support sanctions of hong kong because in the words of some Business People, that means the game is over. Why punish the seven odd Million People . This is not the way forward. Then, your issue is not so much the bill itself but how it is being introduced . Ms. Emily lau well, both. If they understand the way they are doing it is very wrong, they should stop it and then they should have a discussion with the community. They are having such violent reactions. Why the people are so fearful and angry. The thing to do is to engage the people, not just beat them on the head and try to crush them. Does it feel like beijing has lost its temper or its patients with the progress hong kong is making and it is very much willing to trade in or put at risk its position as a Global Financial hub in order to maintain or consolidate complete control . Ms. Emily lau they must ask why why is such a peaceful and safe city suddenly blowing up like that . In the trigger was the extradition bill which carrie lam, the chief executive, proposed and then months later she withdrew it up by then, the damage had been done. The police were encouraged and not just by hong kong but by mainland authorities to go out and beat up hong kong people. Over 1000 people have been arrested. But not one Single Police officer. There is no trust on either side, that much is clear. What can hong kong or your site do to communicate with beijing if you want to try to get a message across that what protesters are going for is not complete independence which is what beijing is most scared of . Ms. Emily lau most hong kong people are not going for independence. The are not going for overthrow of the Chinese Communist party. How can i get my message across . I do it through you, my dear. Im sure they are listening to your program. That cannotomeone go to mainland china. I have been banned. For 20 odd years. Through the news media, particularly powerful voices in the news media when you speak to me, i speak to you and i hope they listen. They can hear it. Whether they listen or not is up to them. But i agree with you. We should have dialogue, engagement, and not using brute force. And i tell you, although we are just a city of 7 Million People, we are not going to roll over and play dead. That was a former Hong Kong Democratic Party chair come emily lau. Coming up, crude recovery, oil ticking higher on positive sentiments the market can rebalance. The full story right here, this is bloomberg. Nejra this is bloomberg daybreak europe. Let us get a look at the risk radar. U. S. And u. K. Equities coming back online after holidays yesterday and it looks like we will build on the gains from last week. The 10 year yield moving higher. But also yenss weakness speaking to the risk on sentiment in the market putting aside the war of words between the u. S. And china. Oil above 34 a barrel. Oil has risen following a prediction from russia. Output after historic cuts. Curves have so far exceeded those agreed by the coalition. Luciano jannelli is still with us. Great to have you with us still on the show. As well as what we have been seeing from alexander novak, we heard from others of the iae saying we have not reached peak demand and we could get back to prepandemic levels. Do you expect the rebound on the demand side as far as oil . Luciano i think that we will have a significant rebound. In 2021 we will see not exactly the same growth rate that we saw before this crisis erupted. We were getting out of a downturn, if cycle you remember. It seems by now a very long time ago. And i think we will have some in not having the Labor Participation rate going up. We will see some resourcing. I do think you are going to get pretty much into that direction because we will see a fast recovery but it will not be exactly the same level. Im not going to try to quantify it right now. But we still have upsides to the oil price. The same level of demand we will not see. We will see what will happen. And we also have investments that will affect supply what we will not get at the same demand level, in my opinion. Spot where is the sweet for this market . What is 80 . I dont want to burst any of these bubbles. Brent is at 36. 25. Where does this where is the bandwidth that oil will trade through to keep a goldilocks scenario for opec plus to the back of the year . Look, this is extremely difficult. I think it is already a lot to say that the oil price will go up. I see perhaps 60 but i dont strong axpress too conviction on that. I do see it going up but not brent closerld say to 50, 50 or 60 but closer to 50. You wanted a number. Nejra thank you. Appreciates that. I want to shift the conversation more broadly to the prospect of a rebound post coronavirus because of course, oil demand hinges on that as well. I had a conversation yesterday with the cio of ubs Global Wealth management and he said investors might start positioning for a second wind in andty markets led by value cyclicals and that is because fears of a second wave might start to actually abate a little bit. You said if we see a rally in cyclicals and value, it will be shortlived. You do not want to time that or ride that, so where does your conviction live beyond the next three months in terms of Asset Allocation . Is that my conviction it is a bit difficult for me to follow the argument about a persistent a i am trying toe think about the kind of growth rate beyond the recovery. For the recovery, we need to make sure that gdp is growing in positive territory and i do not have too many doubts about that. I just dont think it will be strong growth. Shthink it will be weaki growth,nd in weakish you dont need value and cyclicals. This now and i dont see it beyond the recovery. I have a pretty strong conviction that beyond the recovery we will see a again Growth Stocks outperforming because we are not moving into a fast growth world beyond the recovery. Recovery, we will go again into a world of positive growth but sluggish growth. I would not link it to a second wave or to the going the way of concerns about a second wave. I personally think we will actually manage any second wave. Itshould be able to manage because we are learning a lot about the first wave. Right . Manus we are indeed and it will be interesting to see if it is cyclicals that outperforms value in this slow, sluggish growth period. That is a debate we will have to have another time. Luciano jannelli. Show, theon this thee minister to pompeii lockdown rules. That is next. Manus it is bloomberg daybreak europe. The u. K. Prime minister Boris Johnson is facing another day of pressure to discipline his most senior adviser, in dominic cummings. He said he had not uttered resigning and it was up to johnson to decide if he should lose his job. Joining us now is the director of news, joe wallace. Good to have you with us. How Many Political careers survive this . Overnight. E survived the real issue here or the question everyone is asking is why is the Prime Minister willing to spend quite as much Political Capital as he has to keep cummings in his job. He is an advisor. It does not make any difference in the balance of power if he goes but i think the Prime Minister is concerned that cummings is the one that has come through the most often. Has been one that credited with brexit among other times for the conservative party. I think there is a feeling that cummings has his finger on the pulse of the popular mood and that is a valuable thing. You dont have to question that judgment in light of current events. Stra yes, briefly, uart, what can we expect in terms of reopening plants . Plans . the Prime Minister came out yesterday talking about the reopening which would normally be very exciting. Sign thate first things are gradually returning to normal. Byt has been overshadowed this. When you have your advisor in the rose garden of the Prime Ministerial residence having a press conference to defend his actions, that is not a great look for a government. And that is overshadowing the leader. You have to question whether this is worthwhile. Nejra great to have you with us. That is it for bloomberg daybreak europe. The european open is up next. The ftse futures point to again. Good morning. Welcome to bloomberg markets. This is the european open. Im matt miller live in berlin. The cac trade. The headlines off the bloomberg terminal. Assuring autonomy. Beijing looks to reassure honk tchoong the judiciary will emain independent. Hong kong the judiciary