Point on renault. There is no question the labor economy overwhelms everything else. The depression of labor is absolutely front and center into this week. With all the other news and distractions as well, the labor economy, globally, is stunningly week. Francine we will have a lot of folks on unemployment across the world. Ritika in minneapolis, a third night of violent protests over the death of a black man who died in police custody. Protesters torched a Police Station and a number of businesses were also burned. Demonstrations spread to other cities in kentucky over another police shooting. The president called the rioters thugs and threatened to send in the national guard. This came hours after the president issued an executive order seeking liability protection. Earlier this week, twitter began selected factchecks of his tweets. Today, President Trump will announce his response to chinas crackdown on hong kong. The president says he is not happy with new legislation that curves freedom in the former british colony. Earlier this week, the ministration declared the hong kong had effectively lost its autonomy opening the door for the president to impose penalties. More signs in japan but the coronavirus has frozen demands at home and abroad. Japanese factory output dropped in april by the most since the 2011 tsunami. Meanwhile, retail sales fell from the previous month. Global news 24 hours a day. This is bloomberg. So much data. Im going to go through it quickly. There is not all that much going on. Over the weekend, and into sunday, monday morning in ona, i really want to focus renminbi dynamics. It has been weaker through the six levels. To 7. 15. An up i really do this. There are two renminbi quotes. There is the offshore quote and they trade differently. I tell you, into the sunday evening asia morning, i really have got to watch both remember quotes. Francine im looking at one of the quotes. We are actually on the same page when it comes to looking at the markets. Overall, stocks are falling in europe. U. S. Futures are also down. I think there is a lot hanging on this press conference where we will see what President Trump does after threatening china and whether china then retaliates. Treasuries are gaining. European bonds are gaining. I decided to put the 10 year yield simply because we had that gd he figure. Gdp figure. Sident trump is set to joining us from hong kong is bloombergs chief Asia Economic correspondent. What is china prepared to do if the u. S. Escalates . What are we thinking about in terms of escalation right now. Certainly, a lot will depend on what sanctions or what tune of retaliation President Trump chooses later today. We know he has a range of options. At one end, he could sanction options on chinese officials working in hong kong or working on matters related to hong kong. That would be pretty modest in the broader scheme of things. Or he could go to the other end essentially, that would have repercussions for global trade and potentially hurt both economies. The rhetoric seems to be said with theals u. S. Is doing is pure nonsense. Depending on what trump says, how much will china escalate this . How will they retaliate . Do they have anything to lose right now . they threaten to retaliate and most likely will. They need to be seem to be doing something because from the start, the accused the u. S. Of foreign interference and said it is an internal chinese matter. When other clearest options would be to potentially blacklist u. S. Companies operating in china which would make it much more difficult for them to do business. Certainly get back at the usa. Again, it depends on the gravity of the retaliation that President Trump offers. That will dictate the next step in the cycle. Tom what are we going to see this weekend . It is friday evening in your hong kong. Im absolutely fascinated by the dynamics here with the pandemic overlay. Versus the sequence of protests we have seen over the last decade, and even back to the previous decade, what do you gain, what do you guess, what do you think about this weekend . Enda it will be interesting to see how it plays out. Indications at the moment are that there will be protests. Again, it will probably depend on how the u. S. Moves tonight and how china retaliates. Either way, even beyond this weekend, there are key milestones coming up for the protest here where we might expect to see bigger crowds. One thing to bear in mind is that there are still restrictions on large governments in hong kong because of the coronavirus just like there is anywhere else keeping some degree of a lid on the protests release much more on the front this time around in terms of trying to break up the momentum of a crowd. This weekend, we will see how it goes, but certainly, in the coming weeks and months, there are plenty of ways they could get momentum. Tom one final question, lets get out front of the 14 articles that are going to come out talking about hong kong to singapore. I once flew folks from hong kong to singapore and spent the entire time with a guy next to me talking about the brazil migration to singapore. It has never really happened and is it going to happen this time around . One of the key talking points here is about the movement of money and the movement of people. At the moment, there is a lot of chatter about capital moving. When you look at the data, it doesnt show any kind of broadbased capital leaving hong kong. It shows that until recently, there was a net inflow. I think again, there is an element of companies are going to wait and see the detail of this plan and see how the u. S. Response. Again, there is no doubt that hong kong is now moving through a different stage and that dynamic will play itself out over the coming months and years. Francine thank you so much. Enda joining us from hong kong. Winning is now is the intelligence director of research. To be escalating a lot more than it did last year. This is also ahead of the u. S. Election. How tough President Trump be on china . The escalation is ongoing. I think it is important to put things in perspective. The Chinese Government is pushing out the latest escalation. S is not going to become there is still room. Arvest lee, we are in a. Of growing obviously, we are in a period of growing tension. Move,mp decides to take a and the shortterm, what we might see is some sanctioning of specific individuals, possibly including the hong kong chief executive and some chinese officials. We dont think it is going to go beyond the in the short term. Kong staplesg would only benefit china because it would force Multinational Companies to move some of activities in places like shanghai or shenzhen. This is why all in all, lots of rhetoric here. This will continue, but in terms of tangible action, i think we will see a more optimistic side. Francine deep down, do you think the u. S. Really blames china for not doing dealing with this pandemic . Wolfango i think there is a wider china issue in the context of the u. S. Election. Regardless of hong kong, the pandemic, china was going to be the whipping boy in the u. S. Election cycle. You need an enemy. At the end of the day, we have seen it, specifically with candidates like President Trump. The enemy in the previous cycle was mexico. This time, china will play that kind of role regardless of the issues. Obviously, the pandemic in the hong kong matter will only further fuel this, but i think the china card was already on the deck, if i can put it that way. Tom we are going to talk to you in our next section about europe. You wrote a recent essay about the exit strategy for europe. Let me be direct. With the optionality but then developed west to has with hong kong, what is your best exit strategy for america, the United Kingdom and others from a changed hong kong . Wolfango human exit strategy in terms of the world pandemic story or tom no. Is going to move into hong kong over the next five to 10 years. How do we exit with grace . Wolfango yes. Only Trumps Press Conference today, but the foreign minister has a meeting today and hong kong and china will be on the agenda. From the european side, i think we are not going to see a unique strategy. There are too many interests at state. At best from europe, we might see a strong condemnation like they like to do. That, not much else. Isterms of what is at stake china which has been the pipeline for many years. The idea was to conclude in september when america was supposed to make president xi. I dont think we are going to get much strategy on this anytime soon. To support important the u. K. Position and potentially lining the u. K. Take a bit of a leading position here on the hong kong matter for obvious reasons. The problem here with the brexit story in the background is a complicated endeavor as well. Tom very quickly, because we want to come back on europe, what would be your recommendation to Prime Minister johnson to effect a current hong kong strategy . Johnson Prime Minister has got plenty of issues already to deal with. We have seen the u. K. Not be a positioniculate for hong kong so far, now this announcement about passports being available. To me, it looks like an act of desperation. I think what johnson should try to do is get the support of the other key european economies starting from germany in terms of hong kong. That would be my move here. Wonderful. Lets come back because we really want to talk to you about your real focus on europe that you have done in your essays. Coming up, lemme get your attention. A 9 trillionling fed Balance Sheet in the vicinity of the fourth of july plus or minus a couple of weeks. Dont quote me on that. That will be a topic for our Michael Mckee in conversation with Loretta Mester of the cleveland fed. Stay with us. This is bloomberg. Tom good morning, everyone. Jobs day is next friday, the first friday of june. We will have real attention there to the horrific American Labor economy. It is not much better and other parts of the world. Europe coming out of the pandemic doing better out of the pandemic, has its own challenges. Wolfgango is with us right now. I dont know if you have a number on the Unemployment Rate for europe, but have they basically given up the labor games of the last 10 years . Wolfango possibly. I think possibly, we are heading that direction. Likely, then other places. The other way around, i think this time, we have better tools to deal with that. We have a commission program. We have seen loss of shock absorbers put into place. This time, you could issue debt and nobody seems to be particularly troubled with that. Definitely an issue. I guess there is a chance it is going to be better managed. What are we seeing give in the june of the politics of the different nations in brussels. I think brussels has really been off the radar through this month of may. Tell us about the individual nations as they deal with each other in brussels. What is the tension there right now . Wolfango first of all, we havent seen much coordination in terms of dealing with the pandemic. Both in terms of how to lock down the system and reopen. The next big one is going to be about travel, whether we seek some coordination there, which we have seen in countries like greece and spain because they need to rescue their summer season, or whether we are going to end up with bilateral deals, air breaches, trouble bubbles we have seen so far. In my view, that coordination is likely to materialize. Second, the other area which we have left behind, brexit is still with us. We have the final meeting next week between the two negotiated heads in june. Progress has not been achieved. Theres a deadline on the 30th of june. Deadlines are always flexible from brussels perspective, but that issue is still there. And then, we have countries where the rally around the flag affecting the crisis is over. Mccrone is back at 35 of polarity. The president of spain is struggling. Even the italian Prime Minister will manage to increase his popularity. We are going back to the confrontational politics prepandemic, in short here. What are the dangers of some of the European Countries needing a bailout at the end of this . The risk has may decreased significantly because of some of the proposals of a commission, but is there enough money in there . All, the first of Commission Proposal is still a proposal. Best case scenario, even if that money will be available from what remains is the ecb. We are expecting the ecb to now, thebecause as of current money available will run september. E end of become then become will countries be able to end their money in effective ways in order to boost growth and minimize the social impact of the crisis. That will be a sort of hit and miss. It is going to be country by country. Some countries are better position to do that. Others like italy struggled. I thinkebt frontier, tom wesue is not have got to leave it there. Coming up, david bloom. This is bloomberg. This is bloomberg surveillance. There was a third night of violence in minneapolis over the death of george floyd, a black man in police custody. Hundreds of people protested and set fire to a Police Station. President trump testified the protesters posted the protesters were thugs and twitter removed it. The Trump Administration warns china will be held accountable for the new security a law security law that curbs freedom and hong kong. Fromesponse could range sanctions to revoking the special trade status. 300,000 hong kong resident, unless china backs down. To come toly allowed the u. K. For six months. U. K. Doeswn in the not appear to have helped business sentiment. According to a survey published by lloyds bank, economic intentions fell this month. Global news 24 hours a day, on air and quicktake on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. I am ritika gupta. This is bloomberg. Francine thank you so much. Lets talk about the dollar and sterling. Joining us is david bloom, hsbc had of head of fixed strategy. When you look at the currencies, it feels like sterling could be the most interesting this year. Is it . David everything is fascinating at the moment but this next Generation Fund as we would argue something that will affect sterling, and upside for the euro. There is no way the u. K. Wants to start paying into the fund for people to save them from the euro. We are trying to work out a deal by the end of the year and this has exaggerated that eurosterling upside is what we have seen throughout the story. Francine the fact that the bank of england is flirting with negative rates, what would that do . Do you think they would not do it or is that still a possibility . David i cannot rule anything out in this bizarre world. We are not expecting negative rates and we have written a piece on this much ado about nothing. Once you are negative, you are done. Tiny,ves after that are the volatility is tiny. It took the ecb to cut from five so the talk and that is it. Of we have a bunch audiences that come together with one desire. Would david bloom explain if the euro is tradable given the sea change . We have a 1. 11 print this morning and Everyone Wants to know will we get a shift, a strong euro that pops through 1. 12. Is that feasible . David it is feasible. We started off quite negative on the euro and wrote all unhappy families are unhappy in their own way, a famous quote by tolstoy. This is a game changer. We have still got the frugal austria, sweden, netherlands, and denmark, but we raised our eurodollar target. We were pretty bearish that this thing is going down, under thought about by the market. We were wrong. Sorry, i made a mistake and im raising my forecast back to 1. 10 which i had for months. Now we are in wait at the mode. Wait and see mode. We still have to get the parliaments in the 27 nature nations but if it all goes through, yeah. Is this going to be the mother of all web saws . Whipsaws . Are we all going to climb for a strong euro to get absolutely crushed by the netherlands . David that is the problem and why i am sitting here with my skeptical hat on. If it all goes through, that is the game changer, but these National Parliaments have to parse the frugal for are going four are going now. No. The question is whether it is watered down by the time it is done, so it is positive now, no doubt about that, but whether it is a game changer, i will wait and see. I am not diving in now be crushed later by the netherlands, austria, sweden, or denmark. Francine as you say, the frugal four, i keep hearing they could be persuaded to vote for this. What is the probability of this happening . David i would rather wait and see. You think it is a game changer, you buy euros, and we have seen this before with the eurozone. The process is usually fraught with danger. Yes couldas gone up, it have gone up more . Yes. Is a changedis world . No, i wouldnt. I have been burned enough times but it is positive for the euro. Whether it is a complete and utter game changer, i will wait. Francine what would you do with renminbi now . David good question. People have advised buying the bond market on an unhedged basis and those are not bad ideas, but i would not do much with it. I do not think this currency will do much. People are over exaggerating at the moment. It has been pretty stable. The screen is absolutely remarkable when you look at the movement of the renminbi throughout the years, it is tiny. The renminbi is moving a little bit, weakening a little bit, but so was the dollar. We have seen the euro come from 1. 07 to 1. 11 and that is usually associated with a gain. There is lots to get excited about, but i dont think the currency is where the action is as far as i am concerned. Tom david, we are going to come back and drive forward, but lets get to the next block. What is the hsbc dollar call . There is a nuance between Dollar Strength and dollar resiliency. Where are you on that continuum . David against most currencies, we believe in resilience. ,here are the weaker currencies brazil, south africa, turkey, the dollar can do well. The resilience is there. When you look at these numbers on the screen, do not think they will change completely. The dollar is the currency to own and we have a resilient dollar. Some of the currencies on the left tail side of the distribution can do very well. Tom lets come back with david bloom of hsbc and dive into the dollar with a left tail distribution as we saw with em currencies. The game theory with em and a pandemic in brazil, that will be one of the themes for Jonathan Ferro with mohamed elerian. This is bloomberg. Francine this is bloomberg surveillance, tom and francine from london and new york. ,ets get back to david bloom talking about pound and euro. What do you do with emergingmarket currencies . David i think they are hurt i this whole environment. , cuttinglicy, doing qe interest rates, and the currency is a byproduct. The currency will not create inflation. You are not getting inflation so why protect see . Central banks can buy the bond market, the credit market, fiscal policy. One thing they cannot do is print dollars, maybe, so baby, so all of the problems squeeze into one place, the currency, so the currencies are under pressure. Francine is there one currency where you see value other than the dollar . David the ruble has made a comeback and the oil price will pop up. Not doing anything bizarre or crazy, they have been quite traditional and they are under owned, so we quite like the ruble. There are some currencies we quite like. Tom lets rip up the script. When you say we quite like the ruble, do you traded against dollar, euro, or the blended bloomberg basket . David i would say the dollar. The euro at the moment is putting on some weight. In the locked down, everyone is putting on weight and even the euro is. The question we have asked, this is a change and where does the euro settle down . If you want to go along ruble, you go against the dollar on a bit of a risk on bend. This is going to happen, that is going to happen. Shoot for your own idea. Tom it is inside baseball on bloomberg on this friday with david bloom with hsbc. How do you parse poland and hungary versus europe . David poland is an interesting one. They did something fundamental and different cutting rates aggressively. The e. U. Bowl comes through upl comes through splashing 750 billion in the fund. That is good for these currencies so it is a bit of a topsyturvy. We think poland will be under pressure. We are talking Game Changers every day on everything. Normally we get a game changer once a year. Poland comes 40 basis points, boom, in your face yesterday. Where did that come from . Is thepsyturvy statement that david bloom gives you when he doesnt really have a call. [laughter] francine i think it is cfa level three. Tom it is. Francine if you look at what underpins the dollar now, how do you deal with trade worries, china, and huge unemployment figures in the u. S. Go into that . David we think a currency is made up of three dynamics cyclical, structural, and political. Cyclical is out the window. You cannot really drive them much lower, which puts emphasis on the structural and political and that is happening at the moment, the emphasis is changing. The structural emphasis will be the fiscal firepower you have got and where you started off, and some countries have started off terrible on the fiscal side. You do not want to start off 80 gdp on the fiscal side. You want to start off where new zealand or australia are. You have to push to get things going in countries that have had a terrible fiscal stance to start with, the euro zone, sterling, those are the bad ones. Ozzie, swissie aussie, swissie, those are the good ones. Tom i like that call. One final question and i say this with immense respect for how dead on hsbc is are you and steve major on the same page . Page, we are on the same a little bit of a difference. It is not so much of a difference between what is going on with the euro zone and this package. It is more important for the bond market than the currency market, so i can sit and wait. He cant. He has to make a big call on this front whereas i dont because the indications on the euro are suppliant second generation. It falls into his domain more than mine so he has to make the big call. I dont think we are different the level ofut importance of this event is different for both of us. Tom this has been wonderful, david loom, what a great david bloom, what a great brief. David have a topsyturvy weekend. Tom wall street week, david westin with an incredibly busy week ahead. Look for that tonight on bloomberg. Good morning. Bloomberghis is surveillance, tom and francine from london and new york. Twitter put up a rule violation on President Trumps tweet about minneapolis, saying they glorify violence and are against the rules. Earned theo factdents ire by posting checking notes next to his tweets. Order limiting the protection of social media companies. Joining us is alex webb. Great to have your thoughts on this. The fact that the president signed this executive order, what exact does it need . Mean . Alex it is not clear. There are lots of questions of what he can do. Provision toge a reduce their liability for online content posted by third parties, but there are questions about the constitutionality and the need for others to take further steps. Fight thats this a twitter is really trying to fight against the president . What exactly is going on . Twitter,t tweet with saying that it is violating the rules. Alex it is an attempt to have this fight now rather than in the middle of the election campaign. This executive order, that executive order is deemed unconstitutional, you dont have a lot of leeway to do stuff, if they get that over and done with in the next couple of months rather than october and november, there have been calls over the last two things to do things they are finally getting to it. Ask you get upset when i what the total enterprise value to ebita is for twitter. Is twitter a News Organization . Is, thedont think it way a lot of people consume their news. The valuation question is so important in a sense that what they dont want to happen, what neither twitter or facebook want to happen is they have to hire checkers. Nt Facebook Content moderators would cost them in the region of ebitdaion a year, 10 of out the window which is something that facebook does not want. Tom they do not want to be a News Organization, i get that. They do not want to hire all the people and yet they disseminate the news. Where do they get off putting disclaimers on it if they are not a News Organization with editorial adjustment judgment . Alex it is entirely problematic. Constitutes awhat News Organization and what doesnt. Is assue is that this sensible middle ground. They are not taking content down they are flagging it as but it seems a middle ground will keep a lot of people happy. Are wegoing francine going to Start Talking again about these companies being broken up to mark what can broken up . What can the administration to . Isx the breakup question hard to do because it will take a lot of time. In the u. S. And europe it has been talked about. You go after their Business Model of scalability, having to have all of these people vetting the content that goes up and the idea that they are just a platform. Int is the thing that brussels and u. K. You have legislation going through so trump is jumping on the bandwagon. Tom alex webb, thank you so much. These are some nuanced discussions to say the least. For me, it is absolutely fascinating. The president will act that as many people say it is a political discussion as well as ofrnalism, but the place twitter within journalism is a real mystery. Francine it is. Job tried to do a better maybe in Fact Checking, but this seems like a big fight. It is interesting to hear alex webb say they want to have this fight now rather than before the election. They have hired a lot more people for Fact Checking the social speedy social media spaces. Tom equities, bonds, currencies, commodities, futures 10, dow futures 103. A big turn for the week. Turn churnbig for the week. Renminbi stable. This is bloomberg. Tom this morning, forget the markets. There are 41 million unemployed. 20 ,nemployment rate above some say well above 20 . What is the policy prescription to get america back on its feet . Is there a will for washington to help the 50 states and district of columbia . It is all about the markets. Will sectors rotate, will yields rotate . What will happen with gold . Will people in hong kong have the strength to protest . Bloomberg surveillance, another week closing of this pandemic. , francineng at home wanders into a very lonely Queen Victoria street in london. I saw a video of the Prime Minister coming out and clapping at 10 downing street
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