How has his week been . Francine it is been a tough week. Lets putain said, the scandal and angle over one of his top advisers driving to his family home in the middle of a lockdown, he is hoping with the gradual reopening of the economy people will be behind him more than they have in. They have been. There is a big figure in terms of euro area inflation close to zero which will put pressure on the ecb to act next week. Tom no question that disinflationary tendency of may with every indication will migrate into june. The jobs report front and center a week from today. Now, our first word news. Ritika in minneapolis, the third night of violent protests over the death of george floyd, a black man who died in police custody. Protesters torched a Police Station and businesses were burned. Moved to other cities. On twitter, President Trump blasted the mayor of minneapolis , called the rioters bugs, gs, and threatened to call in the national guard. The president signed an executive order to limit Liability Protection for twitter and other social media. In response to chinas crackdown on hong kong, the president says he is not happy. Declared hongtion kong has effectively lost its autonomy which opens the door for the president to impose penalties ranging from modest saying to sanctions to revoking their special trading status. Any dutch factory out factory output drop the most since the 2011 tsunami. 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. The. Am ritika gupta. Tom a little bit of an ebb to the market but it has been a churn week. The vix showing a center tendency between the any 30. Beneath 30. The bond market comes in, not much curve steepening but lower yields. Gold up 11. Francine treasuries are also gaining along with european bonds. Afterro extending gains the regions rate fell the most in 11 years. The dollar weakening for a second day. Stocks are down in europe waiting for the planned press conference of President Trump on china. Tom very good. Right now, we want to talk washington. Our chief washington correspondent, kevin cirilli, there can be any number of themes but the most important one into hong kong and possible protest this weekend is how the administration will frame a topic that both parties agree on , the democrats and the republicans. What will be the action plan for the president on this friday on china . Kevin President Trump is set to deliver a press conference later this afternoon where the top subject is supposed to be on china. This comes as secretary of state mike on pao delivered a message to Congress Earlier this week mike pompeo delivered a message to Congress Earlier this week that he can no longer recommend that hong kong receive its independent trading status given the developments in its relationship with beijing. Enjoyed bipartisan support from republican like on capitol hill alike on capitol hill and is a series of policy totals and actions that washington has taken terms of getting a more aggressive tom something i think underreported in the blurb was the tragedy of minneapolis and twitter. Is the polling from the present president , even from the kind rasmussen folks is pretty grim by the old people shocked by the pandemic. He has to address that today or soon. How will he do that . Kevin the issue of Senior Citizen is incredibly localized as it relates to covid19. The per capita Nursing Homes in each district are difference in swing state different in swing states like ohio and wisconsin. Senior citizens are incredibly frustrated at how the government has handled covid19. Based upon conversations i had with the trump reelections folks, reelections folks, they will say this is a local government problem. Many of those areas the democrats have, they will point to the democrats. Coming fromhis is the republicans on how to handle this entire situation. Francine how does President Trump and the white house deal with these protesters because of the killing of george floyd . How does that impact the president s Election Campaign . Kevin we have seen this play out in charlottesville and unfortunately there are many similarities in how the president handled charlottesville and is choosing to handle minneapolis. The president issued an executive order for big Tech Companies. This is a tech story wrapped into there is a separate story of Tech Companies as it relates to the unfortunate, other batch of Race Relations in the country. The president tweeting during the protest in minneapolis criticism for the minneapolis mayor and went on to tweet are dishonoring the memory of george floyd and i will not let that happen. Any difficulty and we will assume control but when the looting start, the shooting starts. Thank you. Twitter labeled this as a violation of rules for glorifying violent. However label they said twitter has determined it may be in the publics interest for the tweet to remain accessible. Twitter has labeled this as a tweet that has glorified violent the president will have a press conference this afternoon that was supposed to be about china but no question minneapolis will be the lead story. Tom you will have complete coverage of that press conference wrap around kevins important show on radio. Kevin cirilli is our chief washington correspondent. A briefing into the weekend to reset the month of june, no one better to do it with than Michael Darden michael darda. This is blue. Bloomberg. Tom good morning, everyone, bloomberg surveillance, on a friday a briefing moving forward to an eventful june. The background is a historically grim labor economy. Darda better than michael and we are thrilled he could join us. How do you change your analysis with the magnitude of the labor shortfall . Michael i think it is important to take a look at a broad array of labor market indicators. The focal point is the unemployment rate. That probably captures best what is happening and this vault upward over the next last moments is like nothing we have seen in history and probably is not over yet, but there are some glimmers of history. First time jobless claims which indicator economic have been pulling back over the and weof eight weeks, are continuing claims that looked like they were pushing upward may have peaked. The news is very grim about the unemployment being seen at levels not since october 1940, but we are heading to a peak which means the recession could end in the next few months and the question is how long will it take us to recover after that. Elasticity orhe responsiveness of all of this to wage dynamics into Interest Rate and disinflation dynamics . Are they linked together enough to give us a pernicious disinflation . Michael i think that is certainly the message of forwardlooking indicators going into this shock, that it was a supplyside and demandside shock, but the demandside element overwhelmed the supplyside element so we have seen expectations for inflation and inflation itself come down. We need to get a Strong Enough recovery going for long enough before we see material pressure on inflation. Inflation will tend to be a stickier and more lagging indicator, but if it is in force you couldl enough, get some Inflationary Pressure but that is probably after the upswing is well on the way. Francine how much more Monetary Policy upswing are you expecting because of deflationary pressure . We had a pretty worrying sign in europe, the lowest inflation in four years. Will we see similar patterns across the rest of the world . Michael i think Central Banks will need to be laser focused on reviving Business Cycles in the aftermath of the pandemic, and in terms of the longerterm goals of full employment and getting inflation to adequate levels, that is the ultimate policy goal. What the Federal Reserve in particular has been doing here is helpful in the sense that they are moving forward in an openended way. After 2008, the policies were limited and close ended with numerical targets for qe. This time, it is more of a qualitative approach and there is more discussion of how the pet fed could be more effective in dealing with shocks, so it is helpful. Lets focus on growth rate and getting back to full Economic Health before discussion of the fed reversing course and pulling back. Francine i keep hearing that the best Investment Advice is do not fight the fed and buy what the fed is buying. Michael that certainly makes a lot of sense, considering that markets discount and risk assets plummeted going into this crisis. Now we have had a big rebound and this probably goes down in history as one of the most hated risk market rallies in history, maybe the most hated. I continue to read stories that suggest a high degree of skepticism, but what you mentioned is worked out in the sense that if you took the occasion of this large collapse to up exposures to equities and other risk asset then you have done quite well. It looks confusing to commentators, why would equities be rallying when the socalled fundamentals are deteriorating . That always happens coming out of a recession, markets discount and look forward. And may not always be right may send a message we do not agree with. If that is the case, too bad. Markets are forecasting an end to the recession and that is roughly correct through the rest of the months so we should keep it simple and not fight the trend. Tom we will come back with michael darda of mkm partners. Michael mckee with sharp questions for Loretta Mester your of the cleveland Loretta Mester of the cleveland fed, welltimed questions. This is bloomberg. Good morning, everyone, bloomberg surveillance. Lots coming up the day and of course the president s press conference scheduled this afternoon. Want darda with us i with us. I want to go back to the and money of velocity and the acceleration of economics, and something Lawrence Kudlow talked about years ago, highpowered money. We are up to our eyeballs in liquidity with someone say a nationalized bond market. How do you define highpowered money in june 2020 . Michael you are onto my favorite topics. Milton friedman defined highpowered money as the Monetary Base, the portion of the money supply the fed has direct control over. When the Central Bank Goes out and purchases and asset, they are different than other banks and financial and duchenne Financial Institutions in that they print money to pay for it which adds reserves to the system. What the federal bank does not reserve control is the broader money aggregates tied to the banking system. Recent efforts, the balance sheet, the monastery Monetary Base hi money high money is up and broad money measures are over 20 plus over the same period. That is more significant that what we saw from the feds first phase response in 2008 where broad money measures barely budged. Fed is some evidence the may be getting more traction this time. Tom does the theory work . A lot of theory we studied in school, does any of that theory and in the complete fiction fantasy we are dealing with now in monetary reality . Michael i think the theory works in the sense that the equation of exchange is a truism but you are dealing with moving variables. When you have a shock like the Global Financial crisis or the coronavirus shock, the velocity of money will change so you dont have a 11 relationship with changes in the monetary and and monetary gdp inflation. The ones who were making that argument in 2008 were very wrong so you need a forward based looking indicator that can tell you whether the central bank is getting traction or not. One that going into and coming out of this crisis for Financial Markets has been the tips inflation breakeven market where we saw inflation move around in scary ways during the month of march the month of march, but having recovered significantly in the wake of the feds aggressive action. The interpretation of what is happening with Monetary Policy needs to go well beyond just looking at basic quantities. Tom we have got to leave it there, michael darda with mkm partners. 10, futures 103, and the vix 29. 03. What do you see in the market . Francine i am seeing a move when it comes to euro. The headline we had in terms of the inflation figure in europe is significant. It fell to the lowest level in four years and seems to be a reason for the ecb to expand monetary stimulus. In may andng 0. 1 pretty much match estimates. Tom it is going to be interesting to say the least. Yieldter tape today, the coming in, but the curve is coming in quite evenly. Almost a disinflationary lethargy, maybe the disinflation in Europe Francine was talking about. Gold is interesting. Pulls away from his gold and euro long. Coming up on washington policy, Henrietta Treyz. 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. Tom and france haynes on london and new york francine from london and new york. Morelt plans to eliminate than 14,000 jobs out of its 180,000 or so and work orders and will lower production workforce and will lower Production Capacity by 1 5. They are facing opposition by labor unions. Here is the chief executive. We didnt give global numbers because we still need instruments we can give examples. If i look at the development of a previous generation of cars versus what we want to do, making sure the common platform making sure we lower the differentiation in the upper body and produce in the same plant, the potential is to save up to 40 of costs by the end capex. That is huge. It could even be up to 2 billion of cost savings. That is an extreme example where we have been very bad in the past and would be extremely good in the future, but nevertheless gives you a good magnitude of the money on the table if we act correct the as we have decided within the alliance. Francine that was clotilde delbos, acting chief of renault. Ritika 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 tweeted the demonstrators were thugs and threatened to call in police. Warneddministration trying i will be held accountable for the new security law that curbs freedom in hong kong. The president plans to announces response today but could range from imposing sanctions to revoking the special trade status. The u. K. Will offer citizenship to 300,000 hong kong resident unless china backs down from the new security legislation. Those who would be eligible are ready have British National overseas passports. They are currently only allowed to come to the u. K. For six months. Easing the lock down in the u. K. Has appeared to help business sentiment. Publishedto a survey both 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 group ritika gupta. Tom Henrietta Treyz joins us now on washington, the hopes of the states, and china. The news flow is so great so i will go to what our tv and Radio Audience really care about, america flat on its back what is your time back. What is your timeline that washington will help the states . Henrietta it keeps slipping. We hoped we would have something before memorial day but now it seems late june or before the fourth of july we just got an interesting question from an investor pulling his providers recently and taking the temperature of d. C. Arbery definitely going to get it . Are we definitely going to get it . It is a great question and there is no urgency from d. C. Tom there is no urgency and it takes a crisis to make policy. When do we see the states do what they do when they run out of money . Henrietta states are going through really tough processes internally now and trying to explain that when they have to cut their budget and are not allowed to go into debt, they have to cut off essential service workers. Getting that message out should create a public outcry that in my opinion has been slow going. They are trying to send that message via states that are up for election and have a difficult senate race. A lot of those are in the senate caucus. Senators, focusing on north carolina, iowa, kansas, all of those republicans with tough reelections, get them out and vocal and sending messages to mcconnell to get a bill on the floor. I see the states trying to in full ands the federal government influence the federal government has been a good way to get things done, but it will probably be july before we get a stimulus package in the range of 1. 5 trillion. Francine why has it and so slow . Why has it been so slow . Henrietta the Republican Caucus is confident there will be a vshaped recovery which will allow them to hold off on spending. You see various states having opened up. They are anticipating robust unemployment growth and people getting back to worth work. They are not accounting for a scenario when you are reopening a restaurant but only at 25 capacity. You do not need 100 of your staff operating at 25 capacity. There might be really incredible gdp growth from here versus the lows, but it will be a smaller and relatively stagnant. The Republican Caucus is hoping for a road that gets you back to a booming economy, or at least able to message a booming economy without having to spend the money. Whether the democrats want to spend more on infrastructure which republicans have been opposed to, the differences are widespread, legal liability for businesses, it runs the gamut. Francine when you look at the kind of sanctions or things we should be expecting from President Trump on china, how aggressive will they be on the socalled sanctions . Henrietta my hope is we dont make changes to hong kong. I think hong kongs autonomy is being severely tested. That is the impression of china hawks in the United States, democrats or republicans. Trajectoryitely the of u. S. China relations for hong kong to be revoked of its mycial trading status, but hope today is this is just due to the treatment of ethnic minorities in china. Tom are you kidding me . This press conference will only address that . I agree it is a big issue. The president will not address hong kong. Do they go into a weekend of protests . Henrietta it will definitely be a question but i dont expect announcel remarks to that hong kong is no longer autonomous. That is something we could see in september, and i see two time horizons in the escalation of the trade war. No question that things will escalate and become more acrimonious. May to august is entirely different from late august to november 3, election day. There is a time now considering the ramifications for the heartland, the farming base where those senators are up for reelection, you need to preserve the phase one trade deal. While china is missing the purchase commitments, they are focusing at a 40 to 45 rate, you have to have a time that is a sweet spot for the president to message on china but avoid the economic calamity from dropping the phase one trade war, and that is something i think pushes to september. Tom you are a great watcher of washington. Are there any china doves . Henrietta you dont see china doves per se, but you see members who are cautious about putting up major changes which would have trickle effects. They are conscientious of that senator kennedy, republican from louisiana offered a bill that would call for a three year period of Delisting Chinese Companies on u. S. Exchanges. Speaker pelosi took a look at it, chairman waters took a look at it and decided, lets pump the brakes. The most we can hope for at of d. C. Is a pumping of the brakes action of china escalation, but there is no one who would say everything is good with china, we are good. My conversations with the deming cried that democratic side as they want to democratic side is they want to demonstrate they they want to have a comprehensive dialogue of how to proceed and understand that china is the second largest economy in the world and you cannot just go to war. That is as dovish as you will get in they are not the majority in the senate. Thank you so much francine thank you so much, Henrietta Treyz. Up next, an exclusive conversation with the product officer. This is blue. This is bloomberg. Ritika this is bloomberg surveillance. It was a bad year for soft banks vision fund but a good one for his ceo whose pay more than doubled in the year ended in march, despite the vision fund posting a 17. 7 billion loss. They had to write down the investment in companies. Saleseported quarterly and profits that were better than expected. They sell more personal computers to companies with workers working from home. Com has cut its forecast. They unveiled software to help businesses restart. Electronic arts will hold onto with block duster title blockbuster title, announcing the production of the madden nfl football game. That is your Bloomberg Business flash. Tom thank you so much. One thing we know is we like to do our research, and one of the great features we note is when a Company Stumbles and improves. Our research has led us to and the fact is they have improved, and surveillance shows that their sandals were effective. Again. S on a roll francine they have to contend with hong kong and a lot of their shops are closed. Tom sent me a picture of those shoes and i thought they were a present for me. I was so disappointed. Patrizio bertelli said sales in china have increased 10 in may after the economy recovered, far from a full recovery, and we talked about sales and more. We think the problem is going to be solved with the discovery of a vaccine which will allow us to go back to a sort of normality, especially tourism because people get used to living within their own country and there will be less mobility. In italy, we are talking about reopening and next week there will be movement between regions, but the airlines, a vaccine is essential to reinstate the psychological tranquility in the minds of people and the market. Francine you are expecting a fight to normal once we the virus . Think yes, definitely. We have to realize there is a need in the whole ecosystem to Pay Attention to the sustainability factor and it is not only a problem for the industry but of the publics view and action toward that industry and its priorities who will have to take into account important factors. Francine what do you see for prada in the next five years . Have you thought about the listing . Delisting . Have you been approached by a big Luxury Company . Patrizio we are focused on the brand, not concerned about delisting. Our sales in china and south korea show our strong position and now we wait for the markets to come back come back. We know our balance will show that we have had a two month or three month lower profit which will be the case for everyone. What concerns our position as a brand and a group, we want to get stronger through direct lines, not strange ways read we are confident about the way ahead and we have many projects to sell. Francine that was patrizio bertelli speaking to me earlier. Coming up in the next hour, Andrew Pekosz from Johns Hopkins as we track covid19 and the ways ahead. This is bloomberg. Bloomberghis is surveillance. As we continue to track the virus, bloomberg has developed a partnership with the leading authority on covid19, Johns Hopkins. We bring you insights from experts in Infectious Disease and emergency preparedness. We are thrilled to be joined by Andrew Pekosz. Should people get tested for antibodies . Do they actually tell us whether you have a chance of being reinfected or not . Andrew this is an important point. Right now, the Antibody Testing tells you if you have been exposed to the virus previously. It doesnt tell you if you would be protected from reinfection yet. Everybody wants to know that data and studies are in place to figure out how these relate to preventing infection, but you have to be clear if you are tested for antibodies, all that tells you is you were exposed before. It does not tell you you have a level of safety or protection going back to the environment in terms of protection from the virus. Francine is this because of false negatives and false positives or because we do not know the amount of immunity we get . If we are immune, when do we find out . Andrew it is a combination of those. A myriad of tests are available but test for different types of antibodies, so unless you know something detailed about the test you are getting done, you will not be able to put it in the right context when it comes to immunity or protection from infection. The issue when it comes to protection from infection, we need time to follow the people who were infected to see if they get reinfected. That is something that takes time for us to have to wait to see the level of reinfection, and once we know that, we can go back and check the blood of these people and say, here are the things that seem to coordinate with protection from reinfection and here are the things that dont. Francine are we working on that all together on a global level or is it each country for themselves . If we are waiting for people to be reinfected, could it take six months to understand the immunity to this virus . Andrew many efforts checking for antibodies are done at the local level. The epidemic has been so different when it comes to city to city and country to country with number of cases and severity of disease. Each country and locality is trying to do their own level of testing just to get a good fixer of what is happening. Good picture, a of what is happening. Beene future, there has some good collaboration across institutions and countries making sure that people are doing the same types of tests and making the same inferences, but much of what is going on will be at the local level because the epidemic has been different in terms of city to city variation, state to state and country to country variation. Francine some states and countries say to wear a mask at all times and others are not are owed bothered. What is the mask most useful for . Andew if you are infected to prevent you from spreading the virus to other people. It is because covid19 has such a High Percentage of cases that either do not show serious symptoms, and it is also clear that the virus can be spread before you show symptoms. Toy countries have taken Wearing Masks to target that portion of the population, those that are infected but not showing symptoms, and limiting the spread of virus from those people can help flatten the curve when it comes to the total number of cases. Masks are only one part of your protection and should not be viewed as a panacea. That you of several have to do to protect yourself from the covid19 virus. Francine thank you so much for joining us, always useful to peak to Andrew Pekosz of Johns Hopkins speak to Andrew Pekosz of Johns Hopkins not miss ourd do exclusive daily conversations. Coming up, join tom keene, Jonathan Ferro and lisa sir Lisa Abramowicz for more bloomberg surveillance. U. S. Futures edging lower, stocks also dropping. We are awaiting the scheduled press conference from President Trump on china. This is bloomberg. Staying connected your way is easier than ever. Youre just a tap away from personalized support on xfinity. Com. Get faster internet speeds with a click. Order xfi pods to your home in a snap. Or change your Xfinity Services with just a touch. All in one place. Youre only seconds away from all of that on xfinity. Com. Faster than a call. Easy as a tap. Now thats simple, easy, awesome. Its hard enough to forecast where the economy will be going over the next months and quarters. Forcasting potential output the next several years is even harder. Every other Financial Market is pricing in something closer to a u. Economic are hazardous at rest. They are even more so now. This is bloomberg keene,lance, with tom and Lisa Abramowicz. Keene, Jonathan Ferro, and Lisa Abramowicz. Jonathan good morning. What a morning. What a day weve got lined up for everyone. The crosscurrents are absolutely amazing. The cyclical appetite continues to build. The relationship between the United States and china continues to break down. Tom china really front and center. Of course, we are going to see that in the