Upheaval in the u. S. Tom the markets really are a separate discussion. Just as we went to eric, i could hear not one that just as we went to air, francine, i could but maybene, not two, three sirens. This is on the Upper Eastside at the edge of harlem at mount sinai hotel. Those are sirens of the new york city in protest overnight, including the mayors daughter being arrested by, according to news reports. It has been an extraordinary 12 hours in washington. Francine and it shook many people to the core. Lets get to first word news in new york city with ritika gupta. Ritika there were more violent protests across the u. S. And thousands took to the streets in Peaceful Demonstrations against Police Killings of black people. That was overshadowed by violence from new york to minneapolis to los angeles. In more than 20 cities, several National Guard troops have been deployed to help local police. Another sign of a trade deal between the u. S. And china is in jeopardy. The u. S. Government has halted purchases of some American Farm goods. Beijing is evaluating the escalation of tensions with the u. S. Over hong kong. The u. K. Government reportedly is planning an economic stimulus package in july according to the Financial Times proposal, said to include spending on training and infrastructure. The bank of england has warned the british economy could shrink 25 this quarter. The deepest slump in more than three centuries. Areamerican astronauts safely aboard the International Space station, as the spacex capital spacex capital right after a historic 19 hour voyage. The mission is seen as a for spacex founder elon musk. Global news 24 hours a day, on air and at quicktake by bloomberg, powered by more than 2700 journalists and analysts in i amthan 120 countries, ritika gupta. This is bloomberg. Francine . Tom . So much. Ks markets with a slight elevation this morning. I would note that the 2year note comes in ever so slightly. Nevertheless, ending over a little bit. The dollar weaker. Francine . Francine i am looking to a similar did a check to yours. What im looking at is u. S. Figures dropping on china stopping imports of soybeans. So the markets are a bit more worried than they were two hours ago about escalation. Im also looking at european a lot of the european stocks are still gaining, but off the highs, eurodollar 1. 1138. 1. 2408. H brexit, held off on accepting a bailout due to the blocks antitrust demands. Joining us now for an exclusive conversation, we are delighted to have margrethe vestager, the European Commissione Vice President. It is a pleasure to be with you. Francine thank you. Some fair to say that airlines are getting bailouts while some competitors are not indeed needed. The Airline Industry is in an. Nprecedented crisis, obviously it is needed and it is up to them to decide what support they will give as long as they live up to rules. With ae what do you do company such as ryanair . The chief executive says this is inherently anticompetitive and market distorting. Is it working distorting . Margrethe of course in the outset, and this is why we also have remedies to try to limit that market distortion. First and foremost, what is given in the first place is liquidity aid. So it is typically loans for the state guarantee. The state gets a fee for putting off that guarantee. Of course, the potential for distortion is much bigger and you enter into recapitalization, which is why of course there are. Trings attached those strings are much more serious. Bonuses are cut for senior management. There is no Share Buyback program. And of course the potential distortions with competition as such in the markets will have to be dealt with. Tom good morning from new york. Now is the power structure in all of this between brussels and each individual nation . Who is calling the shots . Im afraid that is still all in the hands of the coronavirus. The lockdownts of on our economy. This is a crisis that comes from the outside, and i think everyone is trying to do their dualt while preserving the of the european union, the Single Markets that will allow businesses to recover once this crisis healthwise is over. How do you perceive that businesses will pay back the bailouts, the loans, however you want to phrase it . What is the vision that you have , how they will pay these huge billion dollar loans back over the years . Know more i dont than anyone else how the Airline Industry will develop. I think we will see a lot of innovation in that industry, in order to get people back to flying but also to green that entire industry. And obviously they will come into the recovery with debts. This is why recapitalization comes into the picture, and that obviously will strengthen some companies when they have substantial capital. This is why we need to introduce the distortiono of competition. In the lufthansa case, slots are being made available in frankfurt and munich. Francine should be live tented steel be seen as a guidepost for that should the lufthansa deal be seen should the lufthansa deal be seen as a guidepost . Margrethe that goes without saying because we have an obligation of equal treatment, of course. The lufthansa case is the first case of recapitalization. If a casetification is more than 250 million euros, in order to look into whether or not competition is distorted if it is a company with market power. And in the lufthansa case, we are indeed talking about a company with a significant market footprint. So this sets a precedent for recapitalization also in other cases. Francine but is the lufthansa state aid a done deal, or do you still need to agree on other things with the German Government . Margrethe no, we have agreed both on the financial side, sort of the terms and conditions for the state stepping in with capital. In total, loans and capital together are 9 billion euros. Tohave given for them move on and we now we will go through the formality of unification. Thatine can i make sure we won hundred percent understand exactly, for example, the implications for state for france andn the netherlands . For thee well, airlines that you just mentioned, that is a different degree compared to lufthansa because what they get is liquidity. It is lending that will have to come back, debt upon debt. But if they come back, recapitalization, of course, they will be in the same category as lufthansa has been. Francine i look at all of tom i look at all of this, and of course i am a foreigner here. I want to make clear that i am sort of baffled by it all. What is the vision that you have of what you would like these Big Companies to do . There has been a battle about management and labor really across all of europe. Vestagerhe margrethe vision of what you would like to see of the Big Companies forward . Margrethe well, i do not think a leaver me to plan or the Airline Industry, but it is us it is up to us to make sure that the framework is still a framework that caters for fair competition. The first and most important thing is of course the viable businesses with a Healthy Business structure, good management, all of that, that they of course survive this crisis, which is unprecedented, and basically it is a virus that so to not engineer, speak. But the second thing is that once this once businesses survive and become back to some new form of normality, then we need competition to come back as well. Because when a business is challenged, they do their best. They produce better services, more affordable prices, more innovation. And that is important in the Airline Industry. We heard from Angela Merkel and and manual and emmanuel macron, that they want to foster do the rules of the European Commission change need to change for that to be allowed . And should they change . Margrethe well, we do have quite a number of european champions. You will think of lufthansa as one of those champions. What is the most important in creating champions is of course that the Single Market works because here we see if we can make the Single Market work, then european businesses have a home market that can match that of the u. S. , and to some degree that of china. Having a home market that is united and single, that is the most important thing for businesses to try. The second thing is of course if you want to survive in a global marketplace, where the waves are difficult to maneuver, then you need to be used to that. This is of course why businesses in europe will still be challenged and not be left with a Single Market all to themselves. We can do those things at the same time. We have had amazing mergers when it comes to cementing their commitments. Leading companies but still challenged in their home market. That keeps them on their toes. Francine commissioner, do you think there should be more leeway . I understand the premise of exactly what you said, but will there be a little more flexible it in building champions . Will there be a little more flexibility in building champions . Margrethe i think the best example is the extraordinary creation of airbus, which was created many years ago, but the point of that was that this was a procompetitive merger, because indeed, otherwise there would only have been one Major Airline businessand a giant being created in order for competition to come back in the market for the building of theirnes, aircraft in all different shapes that they come in. So you can imagine mergers and outflow competitives in their very nature. When you look at rules, and we look right now at the rules, antitrust rules and merger rules, and it is of course that they have a physical presence. We are entering into an era where not only native Digital Companies are dominated by technology, but also the oldschool sectors will be more and more digital. So it is very important for us to make sure that we stay on target on the fundamentals that businesses should be challenged, that consumers and customers should be served. But of course that we can move as fast as the markets. Because that is an everlasting challenge for a law enforcer, that there is an asymmetry between legal behavior being perpetrated and the law enforcer being able to being investigated is proving to be true. Also to punish it. In that, of course, we are looking at how do our laws work. And the second thing is that we want to be able to take proper note of the markets. As long as the customer can turn to someone else, you have not reached the border of the market. We see that already in the last i think 10 years. The number of markets that are either yay wide or indeed global has risen from just about half the markets to about 65 . So we see the changes in the markets. We also need to serve our fundamental mandate, which is to make sure that businesses are met with the competition in order to do their best. What would you do with alitalia . Under what conditions with the government inject money into this company that was bankrupt before the pandemic . Indeed a veryt is special case. Alitalia was an difficulty already before the corona crisis broke out, so that is a very significant case and we are in contract with the telling authorities of this case. Francine thank you so much for joining us. Margrethe vestager there, European Commissioner European Commission executive Vice President. Tom . Tom thank you so much. We will be back. This is bloomberg. Tom good morning, everyone. Bloomberg surveillance from new york and from london. It has been an extraordinary weekend for america. There are any number of ways to discuss the protests, the riots, and, yes, a continued recovery from pandemic. But all are fixated what has occurred on a sunday and into early monday money. Kevin cirilli will join us throughout bloomberg surveillance today. He has been on 20 47 duty come as all have been on 24 seven duty. The president s chose to not speak to the ratio nation last. Tradition to speak to the nation on sunday going back to Lyndon Baines johnson. When will he speak to the nation . Kevin i am told that the president later today will be meeting with william barr, hosting a series of Conference Calls with attorney generals and governors from across the country. This comes as dozens of protests all around america continue to erupt following the killing of george floyd. Here in washington, d. C. , there were clashes between protesters and secret services secret Service Officers and police officers. There were a series of police cars across the country that were lit on fire, and protesters in some cases clashing with police in very aggressive and sometimes violent encounters. Tom kevin, what will be the political divide on this monday . How will democrats respond, including the Vice President , and how will the president and his core constituency respond . What should we look for . With ayesterday i spoke Senior Advisor to former Vice President joe bidens residential campaign, and i asked that question, and what bidensce joe president ial campaign, and i asked the question, and the source told me that with some of the peaceful protests across the country, the Biden Campaign has put out a series of statements since it has begun calling for there to be justice following the killing of george floyd. But also being increasingly critical of the president s rhetoric and leadership on this issue. In contrast, President Trump yesterday really aggressively protestsng the violent , and the protesters, some of which were violent. He labeled antifa a terrorist organization. I am told by republicans that they feel this is something that they would like to see democrats come out against. So the politics of this already being dug in on both sides. Tom im sure we will get much more on this from Kevin Cirilli in the 6 00 hour as well as experiences the shock of the burning going on right around the white house. A conversation with david haro. This is bloomberg. Francine this is bloomberg surveillance. Tom and francine from london and new york. The focus is on some of the data we had earlier today. This is euro area pmi and the data that we had from the u. K. U. S. Stocks are actually dropping. European shares seem to be holding on to some modest gains after chinese officials also said that Agricultural Companies will pause imports of some farm goods. Although the market earlier on was expecting for the deescalation of the u. S. China trade war, now they are not so sure. Treasuries seem to bet racing some of the earlier declines. If you look at dollar, it is staying low. Pound there is more concern over what is happening with of course the aid of mr. Prime minister Boris Johnson, but also over brexit talks. Coming up, rick lacaille, global chief investment officer. We will be talking treasuries and equities. This is bloomberg. London, francine from joining us to talk about as always, thanks for giving us your time. What markets are doing, huge unrest in the u. S. , a lot going on with the easing of the lockdown and a potential second wave of the virus. Theres also a huge job losses across the world. Why are equities still up . People have seen the real Economic Activity has started to grow in some places. There iss patchy but been asked by policymakers to ensure a safety net. Could be too much too soon in terms of Risk Appetite but i think thats what striven higher. What has driven higher. I wouldnt expect a sharp correction but we do think markets are ahead of themselves and they are due for a pause, if not a correction of some kind. Caseentioned the infection with the second wave, there may remindsthere, the markets the opening growth wont be as smooth straight line. Determinationour of doubt how companies can adapt to all this . In investment and finance and economics as well. Jobs report on ecb decision, etc. How malleable are corporate plans right now . Are we underestimating how we how they can adjust . Rick when you look at things top down, the potential for the economy to grow, you look at individual and their doubt and i think we will see the acceleration of adaptation the way staff are treated, the way they embrace technology. Will be practices quickly. That may drive productivity. A lot is hanging on that. You look at the headwinds of the lockdown, they are pretty severe. History tells you people adapt pretty successfully. Treat the euro strength everyone was talking about over to the equity markets . Are they linked or are they separate events . Rick same thing. Appetite in risk resurgence in Risk Appetite caused people to be more comfortable with taking risks. That creeps into different asset classes. Stepping back from that, there enduring andl be great risk for the economy as it emerges more indebted. Well on the upside still. Do, ise what do you there more value to european bonds if the ecb works on making no comparing to u. S. Treasuries . The periphery may have gone as far as it can go for a while. From a policy perspective, number of these red lines are certainly made thinner and i think thats very successful to europe. If europe can get through this pandemic with a greater sense of eliminating some of the fragilitys of the system then i think it will have a brighter future. I think thats played out already the performa relatively. As you say the periphery bond markets. Value ifyou see more you look at europe compared to asia, where do you see value reaching . Value, it hasas value and risk and the pairing weve had for quite some time wheres the u. S. Is extensive but a little bit less risky. Particular in asia and china has a lot of potential. Its ironic in a world decoupling the opportunity but there is this potential decoupling on the i. T. Front there are businesses in china on the periphery that have very strong potential from a 19 innovation perspective and they harder by this decoupling. Its june 1, i would say huge number of people are thunderstruck on the migration fact vectors to that june beckoning as well. What your enthusiasm for equity after the move weve seen . Is all has all the easy money been made. Returnasm for total stocks . Rick shortterm we pulled back on equities we are underweight which is unfamiliar for us. Longterm, i think recognizing longterm growth will be strong drivers. But those dont look attractive enough right now. Permanent move. Tom thank you so much. Our first word news in new york city. Hittingnt protests thousands of u. S. Cities. Still recovering from the coronavirus lockdown burden from new york to philadelphia and minneapolis. Overwhelmed state and local officials are getting help of thousands of troops. The killings of black people by police. President trump reportedly took shelter and a white house bunker friday night. Service rushed him to the bunker. To opec coalition is set discuss his former output cuts. They may extend the existing deal. Prices around 35 a barrel. Mass testing in the city of wuhan may have eradicated the coronavirus. Cases forhey found no session nearly two months. It infected people who show no signs of being sick can still infect others. Global news 24 hours a day on air and at quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Francine this is bloomberg surveillance. The eu chief negotiator warns britain and needs realistic demands. Eu u. K. Set to leave the sing a marketing Customs Union without a trade deal in place. U. K. Us now is director. How the primeat minister Boris Johnson has been distracted with around over his advisor, does it make it more likely we will have a harder brexit . How does it affect it if at all . A combination of covid and the distraction thats been, plus as you say Dominic Cummings , that has taken a higher amount of the governments time. Stops the government for think about what it wants from brexit. Negotiators were struck down with the disease early on. Is nothing much is going to happen this week. Both sides are dug in and if theres going to be progress it will happen in autumn. Is there any term if we dont have a deal that this gets extended . Thats the rub. We have to do that before the end of june. I think at the moment for theres areasons prospect of asking. They will have to deal there is no prospect of asking. They will have to deal the timetable as is. Sides steps, both back a little bit, they both adopted maximalist positions on some of the issues and start to think about where they are willing to compromise. A question from 60,000 feet over the english channel. We just had a lengthy , how does britain position itself to be distinctive and different from the capitalism that ms. Vess tiger talks about . The future british capitalism is up for that up for grabs. Some of the most remarkable know,als, what we dont there are those who see this is a challenge for reset. That it could become a party of addressing inequality and addressing infrastructure. And of course in the same party you have more traditional promarket people saying we need to shrink the state after this coronavirus as quickly as possible and let Market Forces take over. You have the watch this over time. How has the tom . Ialogue change with the assent he is so different than mr. Corbin buried hes made mr. Corbin. Polling has show the gap between conservatives and the labour party has narrowed according to some pollsters by the biggest amount that polls have shifted in a week ever. Here are those who would say if the government every do with scandals. If the leader of the opposition someone they can consider being prime minister. Francine how would you describe government handling of coronavirus so far . Hedge and me wants to say its too soon to say because a lot will hinge on whether or not the gradual easing will slowdown work. Itther we can get away with without imposing a second nationwide lockdown. There seems to be strong evidence the government was slow to act to start with an impact on contracting the disease and dying from it. Ultimately the two things the three things the government will be judged are the comparative , how quickly and effectively it took out of lockdown, and third, how quickly the economy bounces back. The other impact is on the economy which is been shut down and we dont know whether or not it can bounce back quickly or not. Francine thank yous tom thank you so much, greatly appreciate it. Coming up, looking forward to this. The first quote in the lengthy article this weekend on the future of hong kong and has written a definitive one volume on hong kong. This is bloomberg. Tom bloomberg surveillance. Our Kevin Cirilli from washington after a most difficult night across the nation. , any out of hong kong number of other experts looking at the history of china, hong kong and taiwan. There is no one who has written of the modern history then stephen from oxford. We are thrilled he could join us. I want to get out front of your next essay on hong kong. What will you write about the people of hong kong . Amazing. Ople are they believe in the rights of individuals. They are prepared to stand up knowing full well they will probably be crushed and yet they are standing there. Will we see troops coming over the border . We saw images of those aerial views during the protests a number of months, half a year ago. Do you anticipate we see troops over the border and into the colony . Future,n the immediate the Chinese Governments game , using new security laws to intimidate as the hong kong to contain and if this cannot be done and under the new security law passed, the Chinese Government will have a legal basis to send an Chinese Security forces to hong kong so it can happen, it probably will happen. We dont exactly know the details that will be passed by china. Is it all in the nuance . What are expecting to be in their . Is it willxpect provide a very sweeping definition of the kind of activities that will be deemed unacceptable. We are not just talking about the normal. We are also talking about any act or works that would be seen means of the monopoly of power of mainland china. Provide for Chinese Security agencies to maintain office and deploy their officers in hong kong. Francine how do you see the relationship between the u. S. And china evolving . Will this escalate, these tensions come will they escalate before they deescalate or will they simmer like this for sometime . I think we are the moment on a slow spiral. The u. S. Secretary of state and president have said they no longer consider hong kong enjoying autonomy which justifies hong kong being giving special status by the United States and some kind of sanctions will therefore be devised to the u. S. Administration. When that happens, the Chinese Government will retaliate. Unlikelyg is extremely to back down and appear to acknowledge that he made the mistake about hong kong so he will respond by some kind of and its possible the trumpet ministration also respond. Trump administration will also respond. With lordvolume ends paden. The beijing premise is it can provide Security Response narrowly away from the capitalism and business of hong kong. Do you buy that line or will there be discipline and authority pull into the can bit the Business Community in the actions of capitalism . Whats happening in hong kong unnecessary and avoidable. Ever since the first of july, 1997, there was this high degree of autonomy. We all knew that. Erosion, people in hong kong in the international Business Community acted accordingly. It is what happened the last couple of years when xi jinping significantly up the scale of the new law that is sending a its not just a slow erosion but a dramatic change. And try to an are the impact of whats happening, its a further escalation which will have a very negative impact. We are not quite there yet. We are at the cusp of that development happening which can. E avoided much for beingso with us today. Cant say enough about his various books giving a historical sweep of the political economy of hong kong. Let me do a data check. Futures deteriorated. Flow, they rolled over. Dow futures 62. Vix showing some of the tension. Our Kevin Cirilli will join us from washington in the next hour. This is bloomberg. Tom markets measure protests and the pandemic recovery. Lower andar edges then they retreat in the last hour. It is june. This fridays jobs report will confirm a nation of millions unemployed. Beijing, the president knows mob violence and radical criminals, he does not give a speech on a sunday evening to the nation britain mr. Biden says he will leave the conversation lead to this conversation lead this conversation. Good morning everyone, this is bloomberg surveillance from new york. With sirens in the background different from the pandemic sirens over the last number of weeks. Francine lacqua london as well