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Remain independent. Economy ts, the global takes precedence over the geopolitical tensions between the u. S. And china. The price of the bailout. Brussels set its criteria for backing the state aid pac package from berlin. We are just under an hour away from the start of cac equity trading in europe. Ets take a look at where the u. K. Markets were closed yesterday. They didnt get that take part in the risk on rally that we saw across the continent. We also see u. S. Equity futures rising. U. S. Cash trade was also closed yesterday to honor the memorial day holiday. As a result we see futures in new york up about 2 on the dow and nasdaq futures as well as s p futures up 1. 8 right now. Lets get your first word news. Here are todays top stories from the bloomberg terminal. Once a virus hot spot in europe, italy reported the fewest cases since february. Below 100 for a second day. The global death toll tops 340,000 with 5. 5 million cases confirmed. In england, Outdoor Markets and car showrooms will be able to reopen from june 1 if they can make the coronavirus guidelines to protect shoppers and workers. The government says other nonessential stores such as shops selling clothes, books and electronics can open two weeks later from june 15 if the spread of the virus is kept under control. Chinas leader is move to sweeping security laws. E chief executive says local residents support the legislation. She is pledging the citys freedoms will be preserved saying it is untrue the new law would ban protests. France is set to announce measures to support its Auto Industry today. It will be the first european government to do so highlighting the crucial role cars play in the economy. The plan will include incentives to buy cleaner cars and step up efforts to develop electric power trains and automotive batteries. Powered by more than 2700 journalists and analysts in more than 120 countries. Now asian stocks are climbing with u. S. And european futures despite the escalating geopolitical risks with japan leading gains as the worlds Third Largest economy reopened. Joining us now is emerging markets strategist at Bloomberg News. Why do we see this risk on mood as tensions between the u. S. And china remain high . I think it is probably the markets have an ability to separate the deterioration in the political relationship between the u. S. And china and the economic relationship and for example if you look at the april data, it just had some release, it shows that the chinese were buying significantly more pork and were starting to buy gas from the united states. They try and make their phase one agreement quotas. While i think that might be mistaken, i think that is an important element of todays rally and then the second thing is the background of liquidity and the Global Economy and this process of reopening across the world. You were talking about at the top of the hour, i think that reassured people on a global basis. Matt we were talking about the u. S. China tensions. Some have likened them to a cold war and your question of the day pertains to that. How best to trade chinau. S. Cold war. What is the consensus mp is the u. N. The best way the trade it . I think the number one choice was hong kong stocks and the hong kong dollar. That is because there is such a direct impact and maybe the most traumatic news we saw out of the n. P. C. Related to the Hong Kong Security law. Youre right, it is a popular vehicle for people to trade and i personally think it is going to be difficult for us to persistently break above 720 in ollar rahin biterms. Matt what else do you see happening today in emerging marks . That is your bag. What do you see as the most important trends investors should be watching out for today or this week . Well, i mean, i think people just simply being relatively optimistic about the process of reopening. Like this morning, i was cracked open the latest google mobility trends and if you look across most merging markets at least you have a quite significant improvement even in places where you have really quite serious coronavirus outbreaks like india. Even youre seeing mobility increasing for resale through work and i think that is likely to be threatened in those more developed markets. The dwept yen if you like. We saw for example south korea and the second wave of coronavirus there. It is a very modest second wear but you did see relative underperformance in korea in terms of social distancing. People have increasing social distancing as a consequence of that second we have a wave. If it were to take place, it seems to be well under control now, you might see a similar problem in places like taiwan and thailand and some degree singapore. Again, that is conditional on seeing a second wave. Matt simon, thanks very much. Simon flint there. Emerging Market Strategist for Bloomberg News joining us to talk about the markets. There is a lot going on, especially in berlin. 9rmany offering the airline a billion euro bailout. Will the deal be untenable . Well discuss the airline and bailout in the age of coronavirus next. This is bloomberg. Matt welcome back to bloomberg markets. This is the european open. We are getting some breaking ews on an i. P. O. In europe and amsterdam. Jde peets. P. O. Of it looks like their offer period is going to commence today. The range indicates a market cap that is pretty darn big. 14. 9 billion euros at the low end. 16 billion euros at the high end. The primary offer will be max 23. 3 million shares with the green shoot but dont quote me on. I the settlement offer is expected on june 5. There is the latest i. P. O. News for jde peets. This Company Makes tea and coffee. Eets coffee, im sure you know about worldwide. It is a big nonalcoholic beverage producer. Germany has offered lufthansa a bailout. The deal still requires e. U. Approval and officials are not making it easy. Sources say the European Commission wants lufthansa to surrender some of its key flight slots amid concern that the airline have an unfair advantage overcome pet or thes. Were seeing basically germany negotiate right now with the European Union but it does look like lufthansa is going to get a bailout and i believe berlin has about 90 billion euros earmarked to take direct stakes in companies. Are we going to see germany become the holder of more and more of what right now are public assets . Actually i dont think this different nning of a strategic behavior to have German Government. Lufthansa was a very special case. ,he company because of covid19 ran into an unprecedented situation. In that case it was important strategicically to make sure that lufthansa survives and i dont see this as the beginning of a new trend. Matt yeah. Lufthansa. Obviously this is a company that is 40,000 employees so it understandable that the government wants to do as much as it can to keep the airline in business. Of course it is also important to have one flagship carrier especially in a country that really doesnt have any other competition. It would be hard to fly domesticically if it wasnt for lufthansa. Volkswagen lost a really important decision yesterday. What do you think about the auto sector now that the highest court in germany decided customers who bought cars that had cheating device are going to be eable to take them back for the Purchase Price . This discussion is going on, for years it feels. That is nothing new and from our perspective, when you see what auto stocks have done over the last month, years almost, then it feels like it is already priced in and provisions have been taken. Definitely not positive news but not necessarily incremental news to the sector. En it comes to governments involvements, then we have heard over the last week, it is going be more about trying to support or incentivize the environmental components of for example electrical vehicles but it is not clear yet to what extent the government might consider the Automotive Industry when it comes to the Recovery Funds that we were talking about. Matt i suppose the recovery in terms of your expectations is the most important question. For your strategy, right . What do you expect in terms of the recovery now that the number of new infections for example is lower and lower. Yesterday in berlin we had five new infections. It looks like were going to see a light at the end of the tunnel for the summer. This is what you see the markets reflecting and definitely this will help to ake the economy recover from a never seen downturn in Second Quarter of this year. Still the question mark remains on the slope to have recovery and so now we are expecting it to be a slower recovery with earnings of European Companies being back to 2019 levels probably only by 2022. But then still be big differences among sectors when it comes to the speed of the recovery. Some might take longer. They are facing some structural issues. We heard what the french government was saying. Coupled with demands to reduce the number of domestic flights for environmental reasons. Some factors probably will take longer to recover. We heard some of the Catering Companies as well into the when it comes to their guidance into next year. On the other hand some sectors might be well supported by what i mentioned before, the e. U. Recovery fund s that arein discussion right now, especially focusing the green sector for ample building renovation, renewables. Some might be helped by thistime type of funds and might see a quicker recovery than other sectors. Matt absolutely. Were going to keep you with us a little while longer. The head of european equities at dwf. Well talk about the other big issue facing the Global Economy. Tensions are on the boil. The war of words between beijing and washington continues as china condemns the u. S. Blacklisting of 33 of its terms. Well get all of the details next. This is bloomberg. Matt welcome back to the european open. We are just about 40 minutes away from the cac trade. I want to bring you some headlines quickly that were getting from japan. The country is set or at least according to a document that bloomberg has seen is going to pay 2 3 of the rent for virushit firms. I always thought it was interesting that the government shut down companies not allowing them to make any money or bring n any revenue but still allows landlards to collect rent from those companies. In a true shutdown you would shut down the spland lord and the company and the restaurant or the consumer good sales or what have you. Japans solution going to pay 2 3 of rent for virushit firms. Up to a million yen if you were hit by the virus. If you have a 10,000 a month lease, 2 3 of that gets taken over by the japanese government. Really interesting story. Well continue to wait for developments on this. As i said before we went to or the e of the other other two huge issues facing the Global Economy now, the u. S. China, what some are calling a cold war. China is pushing back against blacklisting of 33 of its firm fwiss u. S. The latest sign of the rapid deterioration after the foreign minister warned that some in america were pushing relations to a new cold war. On a separate front beijing is seeking to reassure hong kongs judiciary will remain independent under a new National Security law. The planned legislation has been fueling concerns that the city may lose one of its Key Selling Points for International Companies and thats where the two dove tail. Really very much these issues related. Our guest is still with us. I thought your take on the ruling was interesting. This is a similar issue, isnt it sn in that these tensions have been there for a while and this is just sort of one more step, one more escalation in the bad u. S. China relationship. Definitely. It is not helpful. Obviously covid19, we are already struggling with the conomy and to bring additional disrupting factors to discuss is not helpful for the path of the recovery. Certainly already beforehand, we had a lot of discussions about where global trade is going to go. So what kind of growth rate will we see in global trade and actually yesterday, over the weekend in europe, we had one of the biggest companies, the chairman was giving an interview saying that they intend to cut their workforce probably by around 20 Going Forward because e fears that global trade will deteriorate, Global Growth will deteriorate. Well see. Overall the Global Economy remains very much integrated and having to move production facilities might hinder the profitability of some companies which again should not be what we are what we want right now over the difficult environment. But yeah, the global trade iscussion will remain with us. Matt what is your quick take . On e. M. Investment . Mean, certainly on the the Positive Side what you have is emerging markets, especially china wholl probably get out of the crisis earlier than the other big regions so that is the positive for them. On the other hand, now the global trade discussions and the conflicts with the u. S. , that is probably less helpful. We have heard the Chinese Government saying for the first time really they are not giving any g. D. P. Growth target for this year. Emerging markets otherwise, when youre talking, thats a different story. Here we only see by now the coronavirus. Matt i have to cut you off there. Head of european equities at d. W. S. There are times when our need to connect really matters. To keep customers and employees in the know. To keep business moving. Comcast business is prepared for times like these. Powered by the nations largest gigspeed network. To help give you the speed, reliability, and security you need. Tools to manage your business from any device, anywhere. And a team of experts here for you 24 7. Weve always believed in the power of working together. Thats why, when every connection counts. You can count on us. Matt welcome back to bloomberg markets. This is the european open. We are 30 minutes from the start of cash equity trading. Were seeing gains of more than 1 on european futures. Much bigger gain on european ftse futures. Yesterday we saw a big rally in continental assets. A little bit of catchup being played in london. The risk on mood continues to roll around the globe as economies start to open up from their lockdowns. European banks could face a 315 billion euro hit to their capital levels as loans turn sour and n fallout from the virus. The regions top regulator added that the Banking System should be able to withstand that thanks to the almost 300 billion euros of excess capital and 180 billion euros of further reserve that have been freed up by the watchdog. Were joined by one of the main ones. Our guest joins us. Chairman of the European Banking Authority. Thank you very much for your time. You think it looks like the banks are safe right now because of all of the reserves that they have put aside, been forced to put aside and now are allowed to be set free. Yeah. Thank you very much for having me. Yes, as you indicate, the report that came out yesterday is that the position of banks as we went into this covid19 situation in rope, prior to the financial crisis of 2008, as of december of last year, the end of the year, banks had 14. 9 , five Percentage Points more than 2009. As we said that is the result of mainly the relation that has been over the last years and the banks have accumulated. On top of that, measures have been put in place since the crisis started. That leads to basically about 458 billion euros that could be used for to absorb losses if needed so that gives banks comfortable position to start with that crisis. Matt what kind of losses should we expect . Clearly it is going to be impossible for you to put an exact number on it. Can you give us a ballpark figure . Some number, some range of numbers that we should expect in terms of the possible losses for banks this year . It is difficult. Difficult for a number of reasons. Mainly because first of all we dont know how it is going to develop from this point on. The shock of the crisis was very large. How long is it going to be over ime . Potential losses. It is difficult to put an overall number. We run a stress test every two years. We took the results from the last stress test of 2018 and pdated with two aspects. The sectors. More likely to be affected by covid19. We increased the volatility that those sectors would default. 380 basis points of potential loss the banks may occur. Compared to the 500 basis points, buffer. This should be enough to support the of losses. Matt im assuming that the worst Case Scenario of your stress test didnt include all global governments forcing a shutdown of their economies for eeks or months on end. Youre expecting to surge here. You expect us to see Bank Failures because oover this surge of bad loans . Thats difficult to tell. We are going to proo provide individual Bank Information in june for every bank. Hey can do their own analysis. Not all banks have the same amount of capital or are exfodse the same type of loans. Ome are more hurt than others. They should be dealt according to rules that we have. Should not cause systemic impact on the Banking Sector at all. Matt let me ask you a question that is from the other side of your perspective. Im sure that macron, johnson, merkel are all hoping that they can count on these banks to do the lending necessary in this time of crisis. From your point of view do you think the banks are lending enough now to help the economy now in its time of need . Yeah. Our initial concern from the crisis was that. That the banks were able to operate. Im happy to report i feel banks have been doing their job. Here has been no significant breakup in the financial sector. In terms of their ability to forward by ing, put and we banks have helped see that the liquidity remains very good despite the fact that the first thing that we saw of course was the credit lines cause a large amount of mortaria being put in place. I think they are doing a good job in that aspect. Matt you think banks are resilient. Stronger than before the last crisis and the move that you have already made coupled with the reserves they had are enough. You have more tools in your tool box, is there ig else the e. B. A. Can do to help banks in this crisis . It is important to say that f course they still have the capital requirement. There is regulatory adjustments. It was built in a way that made the banks more robust. That is a good outcome. The ability to adapt to the downturns by providing ountercyclical measures. Well continue to make sure that banks continue properly. As we evolve in the crisis, banks need to make sure at every point in time they have a good assessment of risk that they have in the books. That is the most important aspect. Matt thanks so much for your time. Really appreciate you joining us this morning. Jose manuel campa is chairman of the European Banking Authority after they released their report yesterday saying it looks like banks have enough reserves and freedom after the e. B. A. Moves to survive, to withstand this crisis. Lets get to Bloomberg Business flash. These are your top corporate stories from the bloomberg terminal. Mccaw mobile stanley ho has died in hong kong. Local media said the 98yearold passed away surrounded by family. He was a pioneer in the gaming throughout his career. Stanley ho has died at age 98. The u. K. Is launching a review into huawei. That is as officials draw up plans to reduce the chinese tech giants involvements in next generation and 5 g networks. It follows the u. S. Announcement f fresh curves on the company. It is restricted from sensitive infrastructure. Regeneron ake in worth about 13 billion. This gives sanofi more firepower to invest in fast growing sectors such as cancer research. That is part of the deal with they plan to sell shares worth 7 billion. That would mark the largest public Equity Offering in the healthcare industry. Up next, a lifeline for deutsche lufthansa. Germany offers them 9 billion in a bailout package. Well discuss that next. This is bloomberg. Matt welcome back to bloomberg markets. Ns the european open. Right now we are just about 16 minutes away from the start of cash equities trading. We have another day of riskon buying for the continent and the u. K. The ftse was closed yesterday. It looks like ftse futures are more than double the gains that were seeing for example in cac futures. U. K. Is playing a little bit of aup game today. A former chair to have Hong Kong Democratic Party said china should drop its proposed National Security law. Hong lau told us most kongers do not want independence for the hub but want to have their views heard. First of all, we they should drop this security law in beijing. It is definitely going to pass on thursday. If they will just cool it, stop it and talk to the hong kong people, talk to Political Parties, the legislators, what is needed, what should be done, what are the concerns of not just the Political Parties but the business community, i heard some Business People saying they are rethinking their plans in hong kong. Do you not think that now with this National Security law on succession, terrorism, on subversion, interfearing with foreign forces, do you not think the companies, the professionals, they are worried . Of course they are. China, the International Community will tell beijing to eally calm down and stop bulldozing this thing through. I dont support sanctions for hong kong because in the words of some Business People, that means the game is over. Why punish the 7 Million People . I dont think it is a way forward. To clarify then, your issue is not so much the proposed bill itself but how it is being introduced . Well, both. I think were talking about both. If they understand the way they are doing it, it is very wrong and they should stop it and then they should have a discussion with the community and see why they have such violent reactions. Why the people are so fearful and so angry. The thing to do is to engage the people. Not just try to crush them. Does it feel like beijing has lost its temper or patience with the progress hong kong is making and it is very much willing to trade in or at least put at risk you know, its position as a Global Financial hub in order to maintain or consolidate complete control . They must ask why . Why is it such a peaceful city could certainly blow up like that and the trigger of course was the extradition bill which lamb proposed. Months later she withdrew it but by then the damage had been done. The police were encouraged to go out and beat hong kong people up. Over 1,000 people have been arrested but not one Single Police officer. There is no trust on either side, emily, that much is clear. What can hong kong or your side to communicate with beijing and to get across what protesters are going for is not complete independence. Most hong kong people are not going for independence. They are not going for the overthrow of the Chinese Communist party and how can i get my message across . I do it through you my dear. Im sure they are listening to your program. I speak as someone who cannot go to mainland china. I have been banned. For 20 odd years. But through the news media, particularly powerful voices in the news media. When you speak to me, i speak to you. I hope they listen. I hope they can hear it. Whether they will listen or not is up to them. I agree with you. We should have dialogue, engagement and not using brute force. I tell you although we are just a city of 7 Million People, we are not going to roll over and play dead. Matt that was former hong kong eputy party chair emily lau. Germany has offered lufthansa a 9 billion euro bailout. The deal still requires e. U. Approval and officials in brussels are not making it easy for berlin. Sources say the Commission Wants lufthansa to surrender key flight slots amid concerns they may have an unfair advantage overcome Pacific Northwest pet or thes. Joining us now is bloomberg Senior Editor benedict campbell. If i fly within germany, i feel like my only choices are lufthansa or airlines owned by lufthansa. Yes, youre right. The competitors are diminished. We used to have a Company Called air berlin. They disappeared in 2017 and really all you have now is lufthansa and companies from abroad like easyjet. And ryanair. They are unhappy about this bailout and what happened with france with air france. Saying these companies shouldnt be pumped full of Government Funds because that chris an uneven playing field. It is a voice that is being heard in brussels. The brussels side is not going to wave this agreement through. They will demand some concessions. As you mentioned slots are sort of an important currency here. If they have to give up slots in frankfurt and munich, that would give other airlines a little bit of an advantage so that is something that might have to give. The question is will lufthansa or the German Government accept this . Were hearing merkel is not happy about this. But ultimately she might have to but to the demands of brussels. Matt what other choice does she have . They wrote a letter to employees saying they desperately need money. They are burning through it at a record pace. How long is nine billion euros going last lufthansa. Is this going to guarantee they survive the crisis . Nobody knows. Will people will flying the way hey used to . Will that kind of business return . Will people be satisfied to board a plane again . Will they want to go through the hassle of check at airports, very long lines . That is all very unclear at this point. When business will return and in what shape or form nobody knows. Nine billion is a big chunk of change and should see them for now and if business returns at some point they will have to repay that money. That is not free money thrown at the company. They will have to give the money back. The german state wants to pull out of lufthansa again. At some point in the not so distant future they will have to withdraw again from the holding. Matt they would like to this three years. Even if they dont, there are guarantees they have to pay more than 9 dividend on the money that they are borrowing from the German Government through i think starting 2027 more than 9 . Very interesting story. Thanks for covering that for us. Are minutes away from the open well bring you to stocks to watch including sanofi. Doubling down on faster growing fields. This is bloomberg. Matt five minutes from the open. Dani . Sanofi should be on the move up today. Tds selling a stake in foorm suit cal company regeneron worth about 13 billion dollars. Those shares are called higher by about 1 . Car makers are going to be in focus today. Macron is set to announce measures to help support the industry. French car makers here. We have heard from one of the secretaries who said they are going to be focusing on specifically electric cars. Not so encouraging consolidation in the auto parts space. Republican all the is no renault is no longer mergeing with nissan. They are working on getting back on track after the coronavirus impact. Matt . Matt thanks. A lot to watch out for. Certainly the car makers are going to be hot today. Coming up at the market open, futures are reporting higher as the risk on mood continues. Snolet 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. Matt we are a minute away from the start of cash equity trading across europe and in the k after those markets were closed yesterday. Top headlines. Bailouts and bankruptcy. Brussels sets the price for its backing up the concept nearly 10 billion state aid package giving up slots in frankfurt. Emmanuel macron is set to announce stimulus for the french auto sector today. Green incentives are likely to feature. And the second south American Airline to file for chapter 11 bankruptcy. Stake justt a 20 months ago. That is now worth considerably less as the Pandemic Forces airlines to seek protection from creditors. European markets are opening up. Let us take a look at where they are trading right now. Here you see futures had been pointing higher and continue to trade higher but the actual cash trade shows us the ftse up more than 1 right now. Up 1. 25 . 5 in madrid we see these markets continuing to rise after coming out of the gate. 2 ftse up now more than waiting for the bigger continental indexes opening up. There you see the cac, bottom of the lefthand column up more than 1 now. Were still waiting for the dax which was up more than 300 points yesterday. 2. 9 . Up it looks like it is going to be adding to those big gains we saw yesterday again today. System opens up, it is the slowest system to get out of the gate typically across europe, you can expect to see gains there in germany. European markets are higher. , the ftse reopening after a Public Holiday but the story on the continent is the bailout of lufthansa. The German Government offering to company 9 billion euros keep it afloat. Joining us now is chris ralph from st. James place. Chris, what do you think about this story and what does it portend for european markets . Can investors be confident we will not see the bankruptcies as europeans government rush to their aid . Chris i think it is a tricky one. Clearly, european governments cannot bail out every company in trouble. But at the same time for a name that is so synonymous with germany such as lufthansa, the german state needs to be i imagine stepping in saying it can support it. Earlier,as you said one has to look at the longerterm implications of this. Whether tied into the rescue of aligning torm a world where people take less flights and it is aligned to the green deal europe is already proposing. We are seeing similar moves in france as well. Ont what is your take then how the recovery is going to play out, chris . Takeinly, we are going to fewer flights especially i know lufthansa still has full sold out flights. My wife came from madrid to frankfurt last week and there shoulder toers shoulder including the middle seats all taken and security in the airports were not wearing masks. It is an experience she does not want to repeat. What about other industries . How do you think the recovery is going to go . Think it depends on an industry by industry basis. Data coming out of china is that a lot of manufacturing companies, particularly those in businesses more focused on isomation where distancing easier can get to full Capacity Service industries whether it is airlines or restaurants or gymnasiums, they are going to find it harder to and ack to anything familiar withs reall what we had before hand. Some people will need to get around to get back to their families, as was the case with your wife. But will people want to travel cheek by jowl for holiday when there is a chance to bring infection into their families . Flightsalso, business are going to be curtailed at least for the rest of the year. We heard from u. S. Based Fund Managers and others that they are willing to travel to the u. K. This year and i would not be surprised if that went into next year as well. Matt do you expect workers to all go back to work, chris . Or do you think there will be a a lot of the workforce still working from home by the end of the year . Chris again, i think it is on an industry by industry basis. Services would be one. I think companies are going to say if you can work from home and are happy to do so, then do so. Some of myspeak to younger colleagues, they are desperately keen to get back into the office. , i am perfectly content to work from home. I think businesses are going to have to look at it on a division by division basis as to how quickly they bring people back into offices. But, in organizations that require people to be working collectively together, take the manufacturing industry, i find it hard to imagine in the short term that some of the tasks that were being performed by workers could be automated or oft there could be the type social distancing we have heard so much about over these last few months. Are going towe keep you with us because i want to get more on your specific investment strategy. Shris ralph, st. Jame place will stay with us. As we had to break, i want to give you an update on shares in the operator of the Frankfurt Airport. I was just mentioning that their security is without masks checking passengers including touching passengers without masks. An interesting situation because you would expect flights to be empty but as i said, the flights i know about have been full and in fact, the shares have been bid up this morning. Up by i think are 15 on news that germany will further lift travel restrictions. Pay attention to this interestrate during this bailout and this airport stock as germany is said to allow people to travel more after june 15. Up next, we will get chris picks. Top stock stick with us for that. This is bloomberg. Bloombergome back to markets, this is the european open. We still have green arrows across the board. The dax taking up the rear there, up 0. 75 . It was up over 300 points yesterday. We are still seeing some big german gains here. Lufthansa is up more than 6 . I mentioned fraport before the break. Also a big gainer. Is also seeing gains, the operator of British Airways and iberia. Let us get the Bloomberg Business flash for you. Top corporate stories from the terminal. Shelvingd renault are their merger plans of according to reuters. They instead want to fix their alliance and work to recover from the corona virus pandemic. Both carmakers will announce restructuring plans this week reportedly. The companies are planning substantial cost cuts that could hit tens of thousands of jobs. Sanofi is selling a stake in about 13worth billion. The companies will continue to collaborate on Drug Research but sanofi will have more ability to invest in other issues like cancer. The largest public Equity Offering in the health care industry. Is starting its own Venture Capital fund. Side hundreds of millions of dollars to invest in fintech companies. The swiss wealth manager will make investments in dozens of company. Declined to discuss specifics. Let us get into some hicks with chris ralph, st. James p lace. Think what you are you most excited about when you get up in the morning these days . What is one investment you have to tell everybody about at a pub if indeed you were going to a pub these days . Chris if we are ever allowed back into a pub. I dont know where the bottom of this will be but i do not fundamentally believe that value is an investment strategy. It is no longer valid. Is valuee, whether it in general, whether it is looking at Something Like the japanese Value Investments which are offering extraordinary levels of value compared to longerterm trends that is an area where i think one can get really excited at the current time. Matt what do you think about the japanese right now . Place thatis it a investors should be focused on . Chris if you think about some of the facts associated with japan so, for example, the japanese corporations held over six point 5 trillion in cash on the Balance Sheets that while japans debt to gdp is quite higherhat level is much than the u. S. For example. In cash reserves held by Japanese Companies are broadly , thed whereas in the u. S. Of cashgy stocks, a lot is held up by the Technology Stocks but there are other companies in the u. S. That are quite cash constrained and have substantial debt. There are areas where the strength of the japanese economy by the positive position of the companies. Matt i was just thinking about japan because their experience of negative rates shows that put ites holding cash elsewhere. And a lot of that cash could have gone into the huge runup in the Technology Sector we have watched in the u. S. What do you think about the what do you think about the faang rally . Chris it continues. Stocks like amazon and netflix ine unsurprisingly done well the pandemic and there is still a lot of mileage left in the transference of traditional forms of retail whether it is talkedshopping and we earlier about not wanting to fly. Im sure people would rather get Home Deliveries rather than going to the supermarket Going Forward. One could see amazon and the like continuing to do well. These sorts of levels with the valuation of associated with expectations being need agh, it will only small slip up as we go through the rest of the year for the market to be crushingly disappointed with them. Environment, when could see other parts of the economy doing better. Matt what do you make of the are here in europe we talking a lot today about the german bailout of lufthansa but in general, the European Recovery Fund being supported by merkel and macron with borrowing. This make you want to bet on european stocks . Early i think it is too to say that will come through partly because the infamous frugal for, i loved because the infamous frugal four our objecting to the idea of the Recovery Fund giving out grants suggesting they should be loans. Think it is petty squabbling if we moved to an environment where the eu as a body is issuing substantial amounts of debt because Interest Rates are so low, that moves the eu into a new paradigm. Into thehat translates performance of individual eu country economies and underlying economies is underlying mpanies is difficult to say. We just spoke about lufthansa being blown about. If this is a positive move for the eu that consolidates the eu sovereignty through not just Monetary Union that into fiscal union as well, one could argue that makes it a stronger trading in tradeng forward with the u. S. And china and others. Onethat would be good news would imagine for the European Companies. Matt i just want to highlight this chart we have up here that hillary put together last week. I keep coming back to it. European stocks trading near a record low versus their u. S. Peers. The stoxx 600 versus the s p 500. It is amazing how little the market is valuing european stocks compared to basically the the, the big tech stocks, faangs. A pleasure having you with us. Chris ralph is st. James places chief global strategist and we hope your lockdown continues safe and sound. Chris stays with us for bloomberg radio. Macron to the rescue. The french president is set to announce support for the countrys Auto Industry today. We are live in paris, next. This is bloomberg. To bloomberg back markets, this is the european open. 23 minutes into the trading day and we are looking at big green arrows. The ftse up zero point 25 . The european indexes were up take yesterday with the german index up 300 points. Some of the movers we will show you a focus on germany. Deutsches lufthansa gaining more than 6 . The whole Airline Industry is doing well today for a number of reasons. For moved on set it is the 9 billion euro bailout from the German Government. Lufthansa, it is the 9 billion euro bailout from the German Government. There will be travel warnings they say but they are going to then, iagictions and also gaining for the same reason. Spain is apparently going to be reopening from july 1. I dont think you could make a that on that. You could make a bet but there are no guarantees on spain because of the political situation there that the operator of iberia and British Airways is up 17 right now. Wirecard pushing back its fullyear results because the audit will take longer. A company that is been that has been surrounded by drama longse of this audit for a time and continues to suffer from it today, down 2 . Emmanuel macron is set to announce support measures for the Auto Industry today, the first eu leader to reveal aid for automakers. It is one of a trio of support packages. Is one of the others. Let us dig into the details and get what we should expect with our french government reporter. You also cover autos closely. What do you think is going to be offered and over what time frame . Basically, we know iconicnault and peugeot, carmakers are going to be in trouble because they shut down plants during the lockdown and nobody has new cars during that period. We expect a set back. There will be a loan for renault and new cash. Remember, this is for the purchase of electric and hybrid and lower emission secondhand cars. And obviously, the timeframe be available in the next few months. Matt just a minute left, the interesting news for a lot of viewers will be the cash for clunkers deal. What kind of incentive will we see from the french government for consumers to start buying again . Reporter it is not clear yet. Some people are thinking this is going to be increased up to 8000 euros for the purchase of electric cars. Vehicles are expensive and they can save the french carmakers. We expect subsidies on secondhand cars which will probably be Combustion Engine cars. Subsidizing co2 emissions. The priority is to support the french economy. Matt and do it with an environmental twist. Thank you for joining us. Reporter with us in paris. Great to have you with us. This is bloomberg. Matt welcome back to bloomberg markets. This is the european open. The session so far and still seeing big green arrows across europe right now led by the aviation and the travel and leisure or. This graph shows we had a real runup in risk assets in the last 15 minutes and we have come down can be come down considerably. Up come up. 9 on the stoxx 600. You are bound to see some gains in the travel and leisure sector. You do right there at the top as soaringit storing for Companies Like iag which operates British Airways and iberia. And the operator of the Frankfurt Airport i remember when they chose that name and i thought it was a horrible idea but they have been named that now for 20 years. And the travel company doing quite well today. And lufthansa with the german a lot gaining more than 6 . Let me give you the first word news. Top stories we are covering. Ofe the virus hot spot europe, yesterday italy reported the fewest new cases since february, daily fatalities in the country were also below 100 for a second day. This comes as the global death 340,000, five point 5 million cases confirmed globally. Hong kongs leader is defending chinas move to impose sweeping National Security laws. This comes amid new protests and growing International Concern for the future of the city but carrie lam is not confirmed saying local residents also support the planned legislation. She is pledging the freedoms of the city will be preserved. She says it is on true the new law would ban protests. Russia sees the oil market balancing in june or july. That as producers have lowered supplies by 14 Million Barrels a day. Opec and its allies reached a Historic Deal in april and despite record lows in crude prices and market skepticism, the prices have come back in the last month. A crucial test of Richard Bransons virgin orbit rocket system came up short. Shortlyion was ended after a boeing 747 released the rocket over the ocean. It is hoping to compete with elon musks spacex for satellite launches but it was not good enough. 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. Now, private Market Investments are not unique in taking big hits during the coronavirus pandemic but as focus turns to the shape of the economic recovery come our next guest predicts there will be more confidence in private markets then Public Markets later this year due to more flexibility for business adjustment. Drakebrockman, founder and managing partner of pemberton joins us now to talk about this. It is really fascinating the position you are in it is one we do not get to see too much. We are so focused on Public Markets that we do not look at the advantages of private investments. And also, not everyone has the means to invest this way. Tell us first what you are doing during this pandemic. Last 10 yearse you have seen big Institutional Investors move significant amounts of capital into private markets. And really picking up the shortfall of bank lending across europe. Been veryat trend has profitable for institutions that have been able to access the new asset class and provide capital for the growth of the european economy. I think the trend will continue because one of the challenges we have seen in the last few months is tremendous volatility in equity markets and fixed income markets. I think if you are a Pension Insurance plan, you do not want volatility. Shortterm, i think everyone is looking at their portfolio making sure they are in butonably good shape longerterm, the trend will continue to see more Companies Moving off stock markets back into private ownership and more Institutional Capital moving into private managers who are supporting that move. Matt are there specific industries, symon, do you think private investment, private loans are more tailored to right now . The private of movement from public to private is driven by private equity ting companies. They tend to be growth industries. , over the last 35 years you have seen tremendous movement around food, technology, health care etc. I also think you will see some of the more Traditional Industries which are going to come under pressure because of the Capital Expenditure they have in those businesses start to talk to private equity and try to move themselves out of Public Markets because of the volatility and the shortterm nature of the earnings reports making it much more difficult for those companies to plan through particularly economic downturns like we are going through at the moment. Advantageou have an right now as banks that need to bewer to shareholders may less willing to invest in a time like this, or to lend in a time like this are you seeing that . Symon historically, whenever we have had significant volatility particularly in the credit slowed down or withdraw lending from the marketplace. I think banks are in a challenging position today. Are being large providers of capital to the small end of the market and that market is going to be particularly hit by the downturn. And so, you have already seen the big european banks come out ahead of whating they expect to be defaults. That provides an opportunity for institutions, life insurance, Pension Funds etc. To come more into the midmarket or upper market where they can be provided significant amounts of capital. Where the banks have withdrawn from the marketplace and are primarily focused on dealing with their problems on the small end of the market or providing capital to Investment Grade companies where under regulatory capital charges it is much less punitive for them to hold that kind of debt. Think a lot of our viewers are fascinated by your moves at pemberton because they are working or still working for public banks right now. Dge did youf e take what did you take from that sector to your foundation of pemberton that gives you an edge in the industry . On the team at pemberton we have several offices across europe and their heads all have long careers in Leveraged Finance and will be provided and have been providing capital for 20 years. We brought that Team Together to operate in partnership with tension plans and Insurance Companies providing them access to this kind of investment. Our history in servicing and originating those transactions for private equity firms meant they were able to quickly establish a large corporate across europe. Over 3. 5 we deployed billion in capital in the european marketplace and we have seen and we will see that grow substantially in the next five years. Much like what we saw in the u. S. In the early 2000s, private managers like ourselves will be the most significant providers of capital in the market over the next 10 years. Matt fascinating stuff. Sign in, thank you for joining symon, thank you for joining us today. Symon drakebrockman is the founder and managing operator of pemberton. All or nothing donald trump threatens to cancel the Republican National convention unless full attendance is allowed. We have an update on that and the coronavirus stateside. That is up next. This is bloomberg. Matt welcome back to bloomberg markets. This is the european open and we are 43 minutes into the session and still looking at decent gains. The dax was up almost 3 yesterday. The ftse now gaining 1. 8 . We are giving up some of the gains we saw earlier but still looking at basically 1 gains here. Bloomberg business flash. Top corporate stories. The big focus, germanys 9 billion euro bailout of deutsche lufthansa. Puts thes this this state back in two a company it privatized two years ago. The deal almost certainly will be challenged by rival airlines like ryanair. Named a chiefas executive as a new chief executive. The management shakeup comes to months after a cash rescue saw a billionaire become chairman of the company. Mercedes daimler performance division. He will take this top job august 1 and we should start seeing the new suvs delivered to customers by then. Hoau casino mogul, stanley has died. The 98yearold passed away surrounded by family. He was a pioneer of macaus gaming industry where his company held a monopoly for decades until Las Vegas Casinos were granted permits to join him. He retired in 2018 and his explainwas estimated at 4 billion. He has died at age 98 and that is your Bloomberg Business flash. Now, back to the coronavirus. The number of deaths in the u. S. Is nearing 100,000 with global deaths at over 346,000. U. S. President donald trump is threatening to pull the planned Republican National convention from North Carolina if the governor of the state does not theantee the port the party will be allowed full attendance. In europe, travel and leisure are leading stock gains as european economies continue their reopening processes and bailout big Companies Like lufthansa. Henry harder and joins us from Annmarie Hordern joins us from new york. Massive boost. More than 5 , the entire sector and names like iag and easyjet up double digits in the green. A glimmer of hope. We covered this yesterday and today. A huge bailout for lufthansa, 9 billion euros. Needing to get the nod from the European Union. And on top of that, the german newswire is saying germany is planning to lift travel warnings. And over the weekend, we heard that spain will be allowing andstic tourism in june opening to foreigners in july and spain is europes number two country for International Tourism destinations behind france. This will look different whether you are a hotel or an airline but this is offering a glimmer of hope for these companies bruised by the pandemic. Set to eased is restrictions as well. What can we expect from the nation in Great Britain . England is different from Northern Ireland or wales. England is looking to ease some restrictions i june 1. By june 1. Brits tonson is urging get out there and spend money. Track to5, they are on open other Stores Including shops selling clothing, toys, and furniture. , you know this as well as i do, we watched Dominic Cummings yesterday, a lot of johnson urging brits to spend money is overshadowed by the Political Drama taking hold of downing street right now. Matt right, that was kind of a thing to watch. If you need a car, i assume you are going out to purchase and aston martin regardless of whatever reason Dominic Cummings has now given us for his weekend john thain to dirt for his durham,johaunt to we head to the elections. Basically, like everything that happens in america, it is getting politicized. President trump is threatening to remove the rnc being held in North Carolina if they do not allow the normal level of crowds as one would normally have. Before the pandemic. This puts the governor in a delicate position. Is they want to follow health and safety protocols and right now come in North Carolina you cannot gather inside more than 10 people and outside more than 25. But President Trump wants full attendance. Thethe democrats, they have dnc scheduled in milwaukee in august but they have already spoken publicly about making attendance virtual. This is going to be a debate as we head towards the election. As parts of the country begin opening up this summer. Matt when are you going back to london . Or are you staying in your new home town of new york city . I will be heading back to london at some point. But i consider both of them my home. Matt you are a transatlantic gal. Annmarie hordern, thank you for joining us from very early in the morning from new york. U. S. Chinaade the cold war we put that question to our laura cooper from our mliv blog. This is bloomberg. Matt welcome back to the european open. Almost an hour into the session and still seeing gains. Not quite as strong but still at least 1 across most indexes. Let us get into the markets with laura cooper. Second day in a row where we have seen real risk on rally here. Looks like it will carry through into the u. S. As well. What is behind this continued optimism . I think markets are focused on the liquidity coming from central banks. They are seeing the ample safety nets for markets. The markets are looking through the recovery. Thate seeing signs economies are beginning to reopen and we are seeking encouraging signs that consumers are going to spend. That is what markets are focused on. They are not focused on the escalating tensions between the u. S. And china. It is really this optimism on the recovery keeping markets underpinned. Matt it does not seem like the markets care at all. The mliv blog has focused our attention. Trade a u. S. China cold war . What are you hearing . If you look at the 2019 playbook as an example. The tensions are going to be a source of market stress but not a catalyst. There are some segments of the market that are more vulnerable. Some comments we hear is the chinese offshore yuan will suffer. When we look back at the first set of trade plans, we saw the currency, under pressure. The on sure you on is going to yuan isr the onshore going to be weaker. It will look for volume. On the currency space, look at the currencies most exposed to the china trade partners. The largest trading partner with china. Space, ioad u. S. Tech dont see that stumbling. Watch is something to for but i do not see it as a catalyst for a sharp fall off. Matt clearly, an american what you are living in london and i have to ask after watching this Dominic Cummings cringe worthy press conference yesterday, i realize this is a big drama everyone is paying attention to. Tabloids have it plastered on their front pages. But is it having any effect on the real economy . Im actually canadian but i am living in london. [laughter] , we are seeing potentially the political pressure in terms of u. K. Assets but ultimately, i think markets are focused on the successful reopening. There are plans to have nonessential shops opened by mid june. And because equities have been impacted by the expectations of the smooth transition to the bounce back level, that will ultimately guide to markets. Laura, thank you so much for joining us. Laura cooper, canadiannorth american living in london. Macroergs mliv strategist. Stay with bloomberg television. Up next is surveillance. This is bloomberg. There are times when our need to connect really matters. To keep customers and employees in the know. To keep business moving. Comcast business is prepared for times like these. Powered by the nations largest gigspeed network. To help give you the speed, reliability, and security you need. Tools to manage your business from any device, anywhere. And a team of experts here for you 24 7. Weve always believed in the power of working together. Thats why, when every connection counts. You can count on us. Francine global stocks are firmly in the, despite tensions. Nearcoronavirus deaths 100,000. And the u. K. , Boris Johnson stands by his embattled and insist stores in england will open on june 15. Sweden did not close its economy but still predict a 70 contraction this year. Th a

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