Trade after huge gains yesterday. Lets get your top headlines today. The grand reopening. Italy removes most restrictions on life after months of coronavirus lockdown. International visitors will not be subject to quarantine. European futures gain across the merkelespite a delay in s stimulus plan. Lufthansa commits to a deep Restructuring Plan after seeing a firstquarter net loss of more than 2 billion. Plus, thousands deny curfews in the United States but clashes with police are limited. The pentagon sent activeduty army units into d. C. , calling it a planning measure. Just under an hour away from the cash trading in europe. Any of those negative headlines dont look set to deter this rally. We are looking at big gains in futures. The futures up 1. 5 after germany future index put up a points more than 430 yesterday, powering about 12,000, looking set to open very risk on. Today you can see ftse futures up more than 1 . U. S. Futures are gaining as well. Dow jones futures are up more half a percent right now. S p futures just about half a percent, as our nasdaq futures. Anna . Anna we will get to the latest moves in the Asian Session in just a moment, but we want to get some breaking news in europe. Numbersines for your dropping in line with estimates. Fouryour numbers dropping in line with estimates. Eating the numbers us fouryear numbers dropping in line with estimates. Toy are not in a position keep going on net profit. They also say they dont see any k,sitive developments on as available see kilometers, or on profit margin. Company says it is expected that workforce will be increased. Plenty of interesting conversation topics, that and lufthansa. We will talk to the ceo of wizz air in minutes. Matt, you mentioned the futures picture looking quite rosy. The picture in asia has been rosy overnight. The south korean market doing well. Just as we in europe have expectation built into a german stimulus package, in asia they have been hearing about south soeas stimulus package, that has been pushing the south korean kospi up by more than 3 . We also have a lot of dollar weakness, which we will get to during the program. Matt u. K. Net gas contracts are , interesting, especially considering the glut in the nat gas market. Lets take a look at the bloomberg first word news. Here are todays top stories from the terminal. Unrest continues across the United States overnight, and President Donald Trump has come under Harsh Criticism for his response to the demonstration. He is also not getting the backing of local governors over his offer to send in the military to prevent looting. Were underf citizens curfews last night as march is continued as well as arrests. In germany, Angela Merkel failed to broker a deal on stimulus yesterday. That delays plans to spend as much as 100 billion euros to reboot europes biggest economy. After nine hours of talks, the Ruling Coalition could not reach a deal, but the parties are going to reconvene for more talks today, and markets look optimistic that they are going to come through. The latest round of brexit talks are set to end friday without a breakthrough. Isomberg has learned the eu pinning its hopes on a dramatic intervention by the Prime Minister. Boris johnson is set to speak with eu leaders later this month. He is likely to be told the bloc can offer concessions if the u. K. Does the same. Global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. Anna . Globally equity markets are continuing, up this morning through the Asian Session. Europe is focusing on the reopening story, setting italy free for most restrictions as of today. We will get to the details on that later. That even as germanys mustang muchanticipated stimulus plan faces a delay. Bloombergs emerging Market Strategist simon flett is with us and can take us through some of this conversation. Simon, it seems we are pushing higher. Some say this rally is very unloved, but that does not stop it from rolling upward. A lot of expectation, it seems, about the reopening story, also want to school stimulus, whether that is in also on fiscal stimulus, whether that is in south korea or germany. Are we expecting too much, or is that excitement wellplaced . Simon i think it is well done overall, but the market disagrees. Certainly in asia, people have been getting excited about the reopening of various states. The United States also reopening. Chicago, i think, today. People want the german stimulus out of their minds because most people think both sides in the debate want to get something done, so people are not overly concerned. Finally, we had a phenomenally Service Number from china, way above expectations. The kind oft merit gains we have seen today, simon . Or that we have seen yesterday into today . 430 and futures are up another 1. 5 . This is another rally for an extra hundred billion euros on stimulus that already totals 1. 2 trillion euros. Thats kind of what it looks like around the world. I admit to being surprised how strong the value has been. To answer your question, i reopening we find the of the various economies is premature because of a significant second wave of covid infections, and even if that does not engender significant policy changes, which is to keep people social distancing, then maybe this will give the market pause for concern. Another area when markets might get concerned is the u. S. China relations. A lot of simmering tension with respect to hong kong, even as the geneort fourth comes tomorrow i would expect that to heat up over the next several weeks. But for the time being, the markets do not care about these things. Matt simon, thanks. Simon flett, bloomberg emerging ,arkets simon flint bloomberg emerging markets strategist out of singapore. Up next, wizz air is not optimistic about its profit margin. We will bring you an exclusive interview with the airlines ceo. Welcome back. We are over 45 minutes away from the start of cash equity trading, but looking at some decent gains after the strong rally we saw yesterday. Gains and futures after the rally in cash yesterday and really as this equity rally rolls around the world. Wizz air reported earnings this morning. Fullyear revenue matched expectations, but the airline does not expect improvement in its profit margin going ahead, obviously hit hard, as all airlines have been, by this lockdown. We are joined by the ceo, joseph , inalready Jozsef Varadi an exclusive interview. Zsef, before we get to what is happening with your competitors and whether this is a level Playing Field, tell me about the specific wizz air earnings story and what your outlook is as lockdowns lift. We have record earnings and record revenues, so we are pleased. Today, we are in a totally different situation given the covid19 impact on the industry, so it is hard to know exactly what to expect. How various restrictions are imposed on the industry, on peoples movement. Depending on that, we will see how we go through this year. But our understanding of the market is that people want to , having billowed down for two to three months. Data suggests that people will move. F. Na good morning, jozse last time we talked to you, we were talking about expansion plans. How youy you talk about dont see a positive development in terms of capacity. Can you give us any guidance as to what capacity will do this year, then . Issef what i can tell you we have a desperate quarter we are in. We are going to be flying around 15 of our total capacity. There is a turning point now in europe. Many countries are lifting restrictions significantly, so we expect to go up to 50 or 60 of capacity. Moves on,on how life we expect it to ramp up to about 80 in the second half. But when you look at other markets that have opened up i saw charts today of china that i think substantiated your forecast, looking at a rebound to 80 , 85 of previous activity. Is that what you expect for the rebound here in europe as well . Absolutely. This is what i would be expecting. People are going to fly. That demand can be further , and we have the perfect Business Model to do so, but we need to see government restrictions going away in order to fly people. But i think the different players in the industry will recover differently. We are a lowcost, very efficient way of doing business. We recover much quicker than the hub and spoke carriers. Joseph, do you think you would be able to take some market share if your government if your a 9 billion government gave you 9 billion euros . That would be lovely, but thats not the reality. We are very efficient from an operability standpoint. In many circumstances, we can manage our staff through the situation. Our liquidity is so strong that we can be around even two years from now. We feel strong about our position in revenue to take advantage of market consecration. Bases inpen new ukraine and albania. Many airports have been approaching us, begging for gross capacity, and we are among the very few airlines that actually can deliver that. See opportunity in germany in particular, around some of lufthansas landing slots . To put things into perspective, lufthansa is getting about 2 of their capacity, and the European Commission wants to create a level Playing Field by having lufthansa owning 98 of slots. What kind of a level Playing Field is that . We also need to take note of the airport costs. In germany, people dont want to be interested in doing something in germany, given the scale of opportunity. Matt did you come into this business expecting it to be a level Playing Field . Has the Airline Industry been a level Playing Field in your experience, and do you think european regulators really want to make it that . Jozsef i think weve had better times in that regard. It looks like the industry is moving backwards. Governments are wanting a gain. That is not great. The government should not be the equity board in the industry. Youre right. Its never been a level Playing Field, but its distorted this time around. Into give us some insight your latest thinking on how flying will look when it gets back on its feet, versus how it used to to look in the past. Will there be empty seats, compulsory masks, air corridors . What will be the big change for you in terms of how you operate . Jozsef clearly we see that people are concerned. Be convincedave to that flying is safe. We dont have a single plane globally where anyone would have been infected. Nevertheless, i think we need to adopt our safety protocol to the current realities. We see that in the foreseeable future people will have to wear masks when they travel. They have to use hand sanitizers. We have removed everything on touch point in the aircraft. We have removed inflight magazines, etc. To minimize the risk. It will be a change in terms of protocol, but i dont think this is fundamentally undermining peoples desire to fly. Matt are you going to be able to login some future lock in some future gains with the prices of oil, where they have been . Does that help your business . Jozsef we are over hedged. We are reporting some hedges. We are smaller than what we can fly. Demand for oil will go back to normal and prices were moved will move up, so i dont think it is a Tipping Point for the industry. Ofa Jozsef Varadi, the ceo wizz air. Coming up, defying the curfew. Thousands of u. S. Protesters take to the streets for an eighth night of protests. Matt welcome back. This is the european open. Futures rise once again today ahead of the open. Lets take a look at some of the events that are going to be happening over the next few days. Googles Parent Company alphabet holds its annual general meeting later today. Investors are going to vote on aboutos proposed pay of 250 million. Hong kongs annual vigil commemorating the Tiananmen Square massacre in beijing will now be held online tomorrow. It had been canceled in the flesh, so it is going to happen in a binary code kind of way. Thats after police banned the gathering for the first time in 30 years. The move could lead to more protests, online and in real life, i rl, as the kids say. The ecb updates its projections for growth and inflation, setting up the scene for policy action. It is expected to boost its emergency stimulus package. On friday, we get the nonfarm payrolls report for may. A 20. 5 million job s figure, but we are looking at an estimate of 8 million job losses in the month. Lets go to the latest on the u. S. Protests over the death of unarmed black man george floyd at the hands of police. The mostly peaceful marches have been taking place despite curfews in cities around the country. The pentagon says 1600 troops have been moved to the washington, d. C. , area, but officials earlier distanced themselves from President Trumps warning that he could use active duty military forces to clamp down. No governor has accepted that invitation. Lets get the latest from new york and our reporter annmarie hordern. Bring us uptodate on the situation. Annmarie we have a number of curfews around the United States, also in new york city, which is actually being extended through june 8, that morning, when new york city is set to reopen. Largely, the protests have been a lot more peaceful. From what i have seen in new , thereesterday evening was a lot more of that looting. New yorkers woke up to a love glass on the street. Today you saw stores really start to board up their storefronts, store after store after store. Plywoodare seeing is down madison avenue, down fifth avenue. In d. C. , one of the things is that the pentagon is moving activeduty army units to the National Capital region. We are seeing a lot of pictures coming from the likes of the Lincoln Memorial and activeduty military that have a different kind of presence you are feeling here in new york, but largely these curfews did not stop peoples protests from taking place. Henry, thanks very much. Annmarie hordern from new york. Up, chancellor Angela Merkel failed to broker a deal yesterday on a stimulus package, delaying plans to spend as much as 100 billion euros to invigorate the german economy. Could there be success in that stimulus plan . We will talk about that. Matt welcome back. 30 minutes from the start of cash equity trading. Did notor Angela Merkel finish her stimulus package yesterday, so now they are going to continue to talk about today spending another 100 billion euros to reinvigorate germanys small touring economy. Of hering coalition christian democrats and the social democrats did not reach an agreement after nine hours of talk yesterday. Sources told bloomberg the party planned to reconvene today and pretty much everyone is optimistic they are going to get it done. You can tell that because the points yesterday and futures are up 1. 5 this morning. We are joined by Peter Fitzgerald with aviva investors. This rally has been really impressive. Investors counting on merkel to deliver. Is there a bit of fomo going on here . Are people trying to get into this rally as they see it continue nonstop . There are positive developments in europe. We are seeing both germany and france on the same page for the first time in quite a while with regards to the european union. Is onore, i think this the Positive Side of expectations relative to where we were a number of months ago. But i do believe markets have gotten a little ahead of in terms of the reigniting of some of the activity thats expected. Anna good morning. Its interesting to think about how these talks might have gone if britain had still been a full member of the european union, rather than in this sort of transition limbo. You made the point that brexit easier. De the deal in terms of the brexit story, what should we watch for on the timeline . Ofhave a timeline at the end june, but the u. K. Government has said many times it will not extend. Where is the picture going to be . Is this really going to go until new years eve, 2020 . Peter first of all, the ability for europe to come up with various rescue packages without the involvement of the u. K. , i think thats a fact that a lot of people under appreciated the ability of the eu to come together in times of crisis. In terms of brexit, i think people should be very concerned. Say that, iny i the midst of what most people recognize, but maybe not all market participants, is probably the worst recession in modern history, where you are seeing gdp fall in doubledigit figures. If you are a hardcore brexiteer , you need a distraction to get your hard brexit through. Not only that, what is a couple more percent off gdp given the crisis we are seeing . I think the risks of a no deal brexit are probably higher now than they have been at any point in this process. Matt we heard this as well from another peter yesterday. The ambassador was telling us that british medivations to get a hard brexit through now, at least those who are for that, they are ready to double down because of the coronavirus pandemic. What about the eu side, peter . Do you think there is any reason for the eu side to press for a deal . Theyve got their own coronavirus concerns, and it seems like it might be less aportant to keep the u. K. Has fantastic trading partner right now. Peter i think most rational individuals would like to see a ,elatively smooth process here one where there are minimal restrictions in place post fifthyear. But i think one has to be prepared for a very negative outcome, and i thick markets are probably pricing in quite enough for that scenario. At the end of the day, both sides probably have to compromise a number of issues. I think that is probably still the central case, but only very marginally so today. You are absolutely right. Has Freedom Union of movement of people, capital goods, and services. That is integral to the european union. They are not going to compromise overly on those points to accommodate the united kingdom. So we talked about the number of negatives around headwinds around brexit and the potential positive of stimulus in europe. Do you think Global Equities are right to carry on regardless of the social unrest in the United States, instead focusing on the possibility of stimulus and the reopening story . We saw some very strong pmi data coming through from china which maybe helps people to see a future for services in europe that look Something Like it used to. Peter yeah, and i think first of all, whats happening in the United States is very sad and appalling. Right markets are looking at the Positive Sides of all thats happened today. While activity may be increasing monthtomonth and some of the numbers we have seen are very high, when something falls 90 and that it actually increases 400 , you are still down 50 . I think one needs to take a step back and think about what activity will look like in six months and 12 months time. It is interesting to see markets worried about the potential for not only a second wave, but in many parts of the world a first wave. And for activity levels to increase, to not only avoid a second lockdown eight could not only avoid a second lockdown, but if covid makes a reappearance, you dont necessarily need a lockdown. You need behavior to actually moderate to have an impact on economic growth. I think there are certain parts of the market where one could look at the risk, but the rally we see at the moment is definitely taking a positive outlook in terms of a vshaped recovery, and a pretty quick one at that. Anna peter, thanks very much. The cio for multiasset macro at aviva investors. Up next, the european stability mechanism lost its Pandemic Fund last month, but so far no Member States have applied to use those funds. We will speak to the esm cfo. That conversation is next. Is next. Welcome back. Just about 20 minutes to go until the start of cash equity trading. We are looking at some big gains in futures. Lets take a look at the big headlines weve gotten our first word news this morning from the bloomberg terminal. Unrest continues across the u. S. President donald trump has come under Harsh Criticism for his response to the demonstrations. He is also not getting the backing of local governors over his offer to send in the military to prevent looting. Thousands of citizens ignored curfews last night as marches and arrests continue. The president says the Republican Party has been forced to seek a new city for its national convention. It has been planned for charlotte, north carolina, but the president wants to move due to the coronavirus restrictions put in place by the states governor. Trump did not definitively say that the gop was pulling out of charlotte and did not say which other cities were under consideration. Brent crude has topped 40 a barrel for the First Time Since march, on signs that opec and its allies are close to agreeing a short extension of their historic output cuts. Bloomberg has learned russia and several other members are in favor of extending the curve by one month. Saudi arabia is in favor of one to three months extension. Global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. Anna . Month, the last european stability mechanism, the esm, announced a fund to help countries through the covid19 crisis. Any member state can seek support to cover the costs of the health aspect of the pandemic, but so far, no countries have applied to use these funds. Lets speak dick allen on of letss a, the ceo speak to kalin. It has been said it is much cheaper for countries tomorrow than the em market. The credit lines are open and attractive, and yet nobody is asking for the money. Why do you think that is . Kalin good morning, and thank you for having me. We are faced by a tragic human crisis. It will be the biggest crisis many of us have experienced. That countries are assessing what to do and how to respond. President and managing director said it is cheaper for countries to finance themselves through esm. We have done is created a package of 540 billion. That,sent 240 billion of and countries can borrow up to 2 gdp for indirect costs. That has to be ready the first of june. This is the first week that countries can start effecting which of the different tools and instruments they want to use, and we are there to help them if they need us. You and other leaders of the esm in talks with leaders of countries who need money . If they could be saving hundreds of millions, even billions of euros by using the esm instead of seeking alternative routes, do you try to convince them to do that . Kalin we have an insurance mechanism for those countries. Those countries can fund themselves through the market, which is easy for them. Ever, if they matt isnt that more expensive for them . That more expensive, for them to go to the market . Kalin the esm is cheaper to go to the market for roughly 11 countries. However, it is not our intention to push our interments to them. They can assess the esm credit line. They can use it if they need to, but already having the credit line variable makes it easier for them to access the market. It can also take away some of the pressure on their sovereign curves because this pandemic line is available. But what is important is that there is a backstop. There is a backstop for sovereigns, a backstop for smes, and a backstop for unemployment, which is through the European Commission. And there are the messages of going through some of these european instrument for companies. It is interesting that you think it has a use, even if it is not tapped. You mentioned it has light conditionality and low fees. Could the conditionality be reduced further, if that was found to be a stumbling block that Member States did not like . Kalin the only conditionality attached to our instrument is that it has to be used for direct and indirect costs, and all countries are made available , some countries in the euro zone can use it and use up to 2 of gdp. Show it is used for medical and health care expenses, and they need to provide details on how much this is and how many billions they will spend on direct and indirect costs. The money can be drawn and applied for up to 2022. Matt what do you think of the esm, you are right, has shown an ability to adapt to the crisis. What do you think of the esm and the social bond principles that you write about in your blog . Kalin what is interesting about pandemic crisis report is that it is targeted to health care and medical expenses. We have seen over the last week that there is a growth and issuance related to social bonds. We have started exploring this and are putting in a framework in today to issue social bonds for pandemic prices if requested. If a request is drawn, we will be financing as my social bonds. Financing this by social bonds. Think the do you difference has been as we see the Recovery Fund announced by Angela Merkel and emmanuel macron, pushed through by the European Commission . There are grants available there, of course. Has that meant we see lower demand for esm credit lines as a result of these alternative rants being possibly available alternative grants being possibly available . Kalin the proposal is a good one. It was followed by the European Commission. But it takes time for those to be put in place. They will be in place by 2021 at the earliest. But the advantage of esm is that it is available as early as today. Countries can apply as early as today and can have significant cost savings if they do so. They dont need to use it, and no one has lost market access, but it is reassuring that this line is available, and for some countries, it can have savings up to 6 billion over 10 years time. Kalin, thanks so much for joining us. Kalin and evian set anev janse talking to us about the benefits of the credit lines they can expend, but no one is reaching out. Minutes away from the open. We are going to get stocks to watch. Been reached with boeing over its troubled 737 max. Matt looking at futures pointing higher ahead of this trading day. Another risk on session in store for european indexes. Lets get the Bloomberg Business flash news. Tiffany shares took a dive yesterday, after womenswear daily reported its deal with lvmh may be uncertain. The giant is reportedly concerned about the impact of the coronavirus on the u. S. Economy and growing unrest across the u. S. No comment from either company. The eu is weighing new powers to protect the blocs economy from Silicon Valley and china. Antitrust chief is looking at potential new tools to intervene. It comes as the block is set to unveil a separate set of regulations preventing companies funded by china and other foreign states. Has managed to transform the hype surrounding its platform into a jump in sales and customers. Results for the one niche app sort in the quarter, and the Company Expects the trend to continue the rest of the year. It is now almost doubling its annual revenue forecast. That is your Bloomberg Business flash. Anna . Anna minutes away from the European Equity market open, it looks like we have a positive start to the session. Lets get into the conversation around stocks to watch. Dani burger joins us with details. We are very focused on the travel sector. Lets start with lufthansa. We have beenlike focused on the travel sector because there is so much damage. Lufthansa signaled a companywide revamp, everything from asset sales to job cuts, all to help it payback the 9 billion euros it has received in bailouts from the German Government. Along with job cuts, it is set to spin off some of its noncore units, and also release earnings, finally, after much delay, reporting a 2. 1 billion euro loss in the first quarter. Two ui we tui, whats the story there . Dani tui making a deal with boeing over the grounding of the 737 max plane. I in their financial last year. Boeing has agreed to compensate for a lot of those losses. They are going to give credit vouchers to purchase new 737 max planes. It is also going to slow down the new orders. Tuis plan to cut back ahead of the Economic Impact of the coronavirus. Anna let me ask you about another aviation story. Wizz air we spoke to the ceo earlier on the lufthansa bailout possibly opening some opportunities for lowcost airlines, even if they dont like the bailout itself. What have we heard from wizz air this morning . Dani that was interesting when you spoke to the ceo, talking about how the industry is changing because of these bailouts. Earnings did come in line, saying they could not give a profit forecast, but some optimism, saying longterm it lands on increasing the workforce. Also, when the ceo spoke to you, he said they plan to reach 80 capacity in the second half of the year, so they are looking forward, hoping for an improved picture. Matt, anna . Anna dani burger with a look at whats going on. I just wanted to mention one headline coming from the u. K. Ian, saying that the government is in talks over a scrappage scheme. Yesterday, when we were looking ahead to the german fiscal stimulus, it still seemed to be put together the hind the scenes. Anticipation,hed so i wonder if we get another day of movement. Matt absolutely. There is a lot of optimism about this bailout package from the germans. Its interesting because it is only 100 billion euros compared to the 1. 2 trillion euros in stimulus the German Government has already made. But cash for clunkers is a big hope not only for the car industry, but all of the supply chain around it. I know we have heard from metal companies, for example, who are very hopeful for some kind of cash for clunkers plan. Coming up, its the market open. Futures are pointing higher again today after the big rallies we saw yesterday. Stick with us for the risk on kickoff. This is bloomberg. Minute to go until the start of cash equities trading. The grand reopening. Most restrictions after months of coronavirus lockdowns. International businesses will not be subject to quarantine. European futures gain across the board despite a delay in stimulus plans in germany. Lufthansa commits to deeper Restructuring Plans after seeing a firstquarter net loss of more than 2 billion. Thousands defy curfews in the United States but clashes with police are limited. The pentagon sends activeduty army units into the d. C. Region, calling it a planning measure. Teachers point higher futures point higher. Matt absolutely. Looks like we will see more gains at the open, even after the big rally we saw yesterday. Its amazing to me. Last week, i thought that 300 point and change again on monday was huge for the dax. Points. Y, it was up 434 so we are looking at a big, big gain continuation in this german rally. Lets take a look at the equity indexes as they come out of the gate this morning. We will see gains for the ftse first off. Its always the first to open open, up 0. 6 . There is the ibex up 1 . The cac is up a little bit more than 1 right now. The dax usually the last to open, especially if there is a lot of volatility, especially if it is a particularly intense trade. Takes the system i guess a little longer to process that. You know the germans, they always want to be very exact. Although, they tend to be punctual as well so i think those two issues may affect each other. Italy is up 1. 25 , a little bit more than that. You can see the broader euro stoxx 600 up. European markets open higher. You can see in the middle column, all of the bonds are selling off, pushing up yields. Higher, markets opening as investors continue to bet on a quick economic recovery from the coronavirus pandemic or just a ton of stimulus to help it on its way. Europe is focusing on the reopening story. Today, with life in italy free from a most restrictions. Here in germany, we have been pretty much opened up for a couple weeks now. We are looking at the possibility of a big stimulus package, another one, being agreed to date. Brexit negotiations heading an impact but the market seems to be shrugging that off. Joining us to talk about all of those issues and more is simon french, chief economist at Panmure Gordon. What do you think is behind this continued rally . Even though the stoxx 600 has not fared quite as well as the s p 500, european stocks are looking strong. Simon good morning, matt, good morning, anna. This is one of those rallies that is built on expectations of what is to come, rather than the real data that we are all seeing on our screens. The real data in front of us is the expectation of fiscal and Monetary Policy are going to work in tandem, which is in fairly stark contrast to a decade ago. It is the thing that investors are holding onto and hoping that the stimulus talks that were fighting each other a decade ago will work in concert. Anna thats the expectation. Good morning to you, simon. I think the share price of renault is moving higher, up by about 6 at the start of trade. That company finalizing a credit facility. Yesterday, we saw german stocks rally. I wonder when governments way out what kind of stimulus to do here, should they be looking at that kind of consumer led stimulus . Should they be looking at something in the vein of a new deal, something that focuses on infrastructure. Is the solution a bit of both . Simon i think you are right with your last point, which is a bit of both. Facingantage of consumer tax curves or spending increases in the real economy over a shorter time horizon. The multiplier, the super multiplier we are looking for on two, three times Government Spending really comes from investment in green spendingcture, r d aheads necessary to keep of other industrial competitors around the world. Keep cyclical business functioning, but also one eye on what is the most efficient public spending. Are an know you economist, a market economist, so we often talk on this program about when we are going to see a shift back to value. You mentioned cyclical stocks, which is why it interests me. We have seen huge drops in those industries. Market is evere going to go back to value . Because so many times, this has been called and failed. Simon yes. Investors i have talked to are worried about the fairytale, the boy who cried wolf. A number of people saying, surely it must come back into vogue. There has to be a reason for value to come back. Lots of the sectors that are traditionally value sectors are structurally embedded. Bed. Of those in some of those are not going to be benefited by covid. A transit accelerated transition. I think you need to be very careful about basking value and value andbasketing growth. Anna we have seen a lot guests talk to us about buying what Central Banks are buying at the moment. There seems to be building expectations that they might increase the Pandemic Fund that they put together. Is that your expectation . Where will you be focused . Simon so i would expected them o, in effect, expect them to, in effect, to effectively say we will flex are asset to theing programs point which we keep yield under control, we keep the transmission mechanism working between Monetary Policy and funding to the real economy. Most interested in is the commentary from the ecbs president , president lagarde, about yield curve control. Is it her responsibility, the ecb governing councils responsibility to control yields . Previously they have said no. I think that narrative will change. Anna simon, thanks very much. Simon french, chief economist at Panmure Gordon stays with us. The dollar weakens as the number of global virus casas slows and Economic Data doesnt show signs of improvement. We will assess Risk Appetite next. This is bloomberg. Welcome back to Bloomberg Markets european open. We are taking a look at the equity indexes. We are seeing 1 gains or more across the continent. Almostow, the ftse is up that much, 0. 9 . Here are todays top corporate stories from the bloomberg terminal. Lufthansa is planning a farreaching restructuring to repay the cost of its 9 billion euro bailout. Europes Biggest Airline will slash employee expenses and look at thinning off noncore units. The news comes as the carrier suffered a 2. 1 billion euro net loss in the first quarter. Has reached a deal with boeing to recoup the financial hit from the 737 max grounding. The travel company says a large part of the cost will be compensated over the next two years. It has put the burden so far at about 370 million euros. The deal will go some way to easing the pressure on tui as demand for travel remains weak. That is your Bloomberg Business flash. Anna . Anna lets talk about the transatlantic divide, shall we . The dollar is under pressure, dropping along with treasuries, as demand for havens winds. Rises of aoptimism rebound in global growth. The greenback weekend over all of its g10 peers. Some Major Economies may have started to emerge from the pandemic driven slowdown. Simon french, chief economist at Panmure Gordon, is with us. Dollar, as aay the haven or the longerterm story of the u. S. Versus other investment destinations at this point . Clearly, the dollar has other roles. Is a global currency. How do you see the Investment Opportunities on either side of the atlantic . Simon look, i am a longterm bull, hopefully not a stale bull, of the u. S. Dollar. I think the second half of the year, although growth will pick up and there will be some movement out of dollars, i think the potential for a road ation of dollar swap markets leading up to the president ial election is one of two risks. Caused9 will significant havoc. Capital flight back into dollars reinforces my structural thesis on the u. S. Dollar. I think the final part of the story, you talk about both sides of the atlantic, covid will change a lot of things but what it will not change as the structural growth differences between europe and the United States. Different demographics, different productivity rates, which means that u. S. Economy still has a structural growth rate almost double the rate of the euro zone. Matt do you expect the unrest in the u. S. To affect the market at some point . Or do you think it just dies down and stays disconnected . Simon look, i have been asked some very difficult questions on your program over a number of years but that may be one of the most difficult because there are so many leaders to that. That. Layers to its not helpful to say i dont know. The one thing i would say is that there are theyre clearly has been shortterm economic disruption as a result of curfews and the disorder. But actually, from what we know thus far, the economic damage should be less than we have seen wrought by covid19. The focus from investors has been, we will accept this offer from the Federal Reserve and u. S. Treasury. That should be enough to us from the civil unrest to date. Anna do you think the market starting to think about november and thinking about the president ial race . Between the candidates, clearly there are big differences between the two. I wonder on some of the things the market is worried about, whether the market is dissecting things that way and working out who thinks what, for example, over china . Simon china is certainly an area where there are fewer differences than traditionally we get in u. S. President ial elections. Both the incumbent and his challenger, joe biden, are quite hawkish on china. I dont see a huge difference depending on who wins. But who joe biden picks as his therefore, you will start to reprice Regulatory Risk in those big sectors. Matt by the way, we are starting to get pmi figures. I think we are expecting all the european pmi figures today, at least in the composite and services number. Rising may services pmi to 27. 9. So atrecast was for 25, least its better than the market was looking for. The composite pmi is the same story, 29. 2, better than the forecast of 29. Clearly, these are incredibly dismal figures. When do you expect to see pickups, simon, really substantial pickups . I mean, is the Fourth Quarter going to look like the kind of recovery we are seeing in china where we are back up to 85 of what we were pretty coronavirus precoronavirus . Data we areis, the getting at the moment is utter nonsense. Than 50,not more suggesting that things are improving. There is incremental improvement. Pmi should be showing north of 50, as they are in china, but they are not. There is clearly some scarring affect that is impacting the data. The much more sensible part of the debate is the one you and your question on, which is, what does overall activity look like . How close can we get back to precovid levels by the end of the year . I think 80 , 85 feels like the right kind of number. Yes, there will be persistent scarring on behavior and household and corporate balance sheets. Ands amazing how businesses households adjust. They can adjust their behavior, supply chains, they can flex as we get Learned Behavior on how to deal with this. You can incrementally move up. We have seen that indicated in china. I expected that to be indicated in europe and the United States as well. Matt thanks so much for coming on, appreciate your time. This morning your time this morning. Simon french is the chief economist at Panmure Gordon. He will continue the conversation with me on Bloomberg Radio in about 40 minutes time. Basically, as soon as this program is done, i recommend you switch over to Bloomberg Radio. Just to in in london on dab digital radio. If youre anywhere else in the world, use the internet to find bloomberg real yield. Up next, mark mobius says he sees a vshaped recovery from the pandemic, despite his view that many global job losses will be permanent. We will hear from his interview with alix steel and guy johnson. This is bloomberg. I see a vshaped recovery, because thats what the markets are telling us. Every market around the world has gone up by 20 , 30 or so, and i am talking about both emerging and developed markets. Shaped recovery is in store for us. Financial markets are being driven higher by Central Banks. There is a divorce from the economic reality and the socioEconomic Impact that we are seeing on the street. There is a racial element happening now in the United States. The market is looking past all of that simply because they know and investors know that the central bank has got their back. Is that ultimately going to blow up in their face . Mark i dont think so, because what we are hearing from companies around the world is that once the lockdown is over, they are going to get the customers coming back in droves. Here in munich, i walked the streets and see people in lines , waitingutside of zara outside of apple, etc. That means people really want to get back to buying again. Once this lockdown is over, i think you are going to see a big recovery in those economies. The numbers are going to look terrible, because you are going to have actual shrinkage in the economies around the world. When you start looking at the numbers next year, youre going to see an incredible increase. Lets save the economy has gone goes up6 , next year it by 1 , that means a 7 increase. I think it will look more like a vshaped recovery. Nevertheless, the u. S. Consumer was a massive part of the Global Economic story before covid19 hit. It is pretty clear that we are going to see a structurally higher level of unemployment United States. We are going to get the payroll numbers on friday. That Consumer Spending power, while it will recover, it is simply not going to be there in the way that it was. While earnings estimates have come down, we still havent fully felt the impact of the unemployment story from the data we are seeing at the moment. When that changes, we are going to feel the force of that. Do you agree with that or do you still think that the consumer can act as a catalyst to keep investors on side . Mark you are absolutely right. A lot of people will lose their jobs permanently. This is not only true of the u. S. , but in emerging markets around the world. Companies say, we dont need to 20 people, we need 15 or 10. A lot of people will be out of work. The answer to that, of course, i think this is what trump will probably do is talk a new deal program. It is associated with the democrats. I think hes going to start a massive program to improve the infrastructure in the u. S. , which will employ a lot of people. I think thats the only answer for the u. S. And for other countries around the world. Weve got to use these dollars and this currency they are getting from multilateral institutions to start massive makework programs, if you will. That includes infrastructure and all kinds of things you can do to put people back to work. I think thats the only answer. The amazing thing to me is, i just looked at the south african rand, and i couldnt believe it. Appreciated it is against the u. S. Dollar by 10 . Why is that . Something is happening in a country which was downgraded by moodys to junk status. Why is that happening . I think the reason is that people see a vshaped recovery and some of these markets. That to we extrapolate emerging markets as well as developed markets, you mentioned this new deal type program. We see something very similar across the board. So many rate cuts coming from emerging markets, Central Banks, and stimulus at the same time, and we are seeing that in developed nations as well. How do you cherry pick the opportunities where that will pay off and where that will come back and bite you . Mark that is a good question and that is why we are emphasizing companies with strong balance sheets. And number of companies will not be around next year. They will have gone bankrupt. We have to look for the survivors. We have to look for those companies that are going to benefit from this huge Infrastructure Spending that we see coming down the road. Mobiushat was mark talking about his expectations for a vshaped economic recovery from the coronavirus pandemic. Also, referencing what he sees as another new deal, Investment Plan for infrastructure coming in the u. S. We will talk about italy. E urges aister cont National Renewal before his government agrees to lift restrictions on Domestic Travel later today. That is next. This is bloomberg. Save hundreds on your wireless bill without even leaving your house. Just keep your phone and switch to xfinity mobile. You can get it by ordering a free sim card online. Once you activate, youll only have to pay for the data you need starting at just 15 a month. There are no term contracts, no activation fees, and no credit check on the first two lines. Get a 50 prepaid card when you switch. Its the most reliable wireless network. And it could save you hundreds. Xfinity mobile. Anna welcome back to the European Market open. Half an hour into a trading session that is quite positive across europe. The dax up by 1. 5. The cac up by 1. 4 . Lot of expectation of what is happening. Similar conversations with a little more detail around south korea. This is a global focus for investors and putting aside the civil unrest in the United States. Lets gets to whats happening. You can see on the world map things are rising across the european continent. We have ininsurers as the biggest gainer. This is a story of cutting back on dividend instead of scrapping it. That is interesting for income investors. Another day of gains, building expectations around whether they might be part of bailout activities or stimulus ctivities. Plenty going on. Matt . Matt lets go to bloomberg first word news. Top stories from the terminal. Unrest continues across the United States. Overnight President Trump came under Harsh Criticism for his response to the demonstrations d he is also not getting any backing from local governors for his offer to send military to prevent looting in their state. Thousands ignored curfews last night. As marches continued, so did the arrests. In germany, Angela Merkel failed to broker a deal on stimulus yesterday. She is expected to deliver on the stimulus today. Not only a huge failure or it wont look like that afterwards. The ruling scotion going to get this through. Brent crude has topped 40 a barrel for the First Time Since march. Signs that opec and its allies are close to agreeing an extension of their historic output cut. Russia and some others are in favor of extending it for one month and saudi arabia 13 months. Globlee global news 24 hours a day, on air. Powered by more than 2700 journalists and analysts in more than 120 countries. Anna . Anna lets get to breaking news. The e. Sumbings going discuss tariff let me nation. Utting salary on vaccines. That is something to watch out for in the sort of week ahead, n the week ahead agenda. An appeal to citizens to work country. O revive the the European Central bank skewed asset purchases. Lets talk to a chief economist and founder of a. V. A. Economics. It was great to speak to you. I want to get into the conversation around the Italian Economy and all of that is important and only say where we do understand many of the restrictions on life are going to be lifted. We have been focused so much on italy in recent months. This must be such a relief. What can you not still do . Where are the areas of public life not quite back to normal . Hi, good morning. Yes, very exciting to be able to travel across the country freely again. I think the main things are that although a lot of shops are alloweded to open, they have decided not to open because they simply think there is not enough demand. Would say that is main constraint that everyday life is missing. Probably for another month that will continue to be the case. And then of course for anybody that has the joy of having children, we still dont have school and wont have school until september and that is clearly putting a lot of burden on families and on the workforce. Matt what kind of in terms of size, in terms of numbers, ra what kind of bankruptcies have you seen across italy and do you expect those to continue into q 3 . At this stage, the basis is very scant. Bear in mind that italy has delayed a lot over the data on businesses unfortunately. But we estimate by the end of this crisis, which we think is going to be particularly long, italy may be losing 300,000,000, maybe 500,000 companies. At this stage, what i notice is that a lot of businesses that probably in any case are heavily underwater are still open but the problem is that the whole Industrial Base is heavily skewed toward micro companies in general and therefore the length of the crisis there is critical dictating the rival. At this stage of course we are looking at new demand because everybody was locked in. New demand in any case with restrictions because we have to respect social distancing. I think by the spring of next year, youll begin to see just how deep is the structural loss of italy because of this period. Anna and in the meantime, what kind of spending power do italians have . How concerned are you . Bankruptcy part of the story. Job losses another part of story. Spending is not going to be what it was. No, absolutely. It is going to be heavily down. This year may be down in double digits. Remember the government has introduced and expanded income support way beyond what is normal. At this stage up until august, even though it has been made redundant, or heavily hit by the crisis, still 600 up to 1,000 euros a month. Actually at this stage, i dont think you see much of a hit. The second wave may be delinquencies in things that you cant afford to not pay, essentially. Things that will not necessarily be cut off immediately and then the biggest problem is probably going to start late in the fall. There are also restrictions on firing. As a company you cannot fire at least until september and im guessing probably there will be a further ban. The biggest income complegs compression is coming through companies not opening up. Matt we were just talking with saidficial from theesm who countries can save a ton of money if they access that facility rather than markets. Of course he understands the stigma. It makes funding on the markets a little cheaper. Do you expect italy to ever access that mechanism . I think access is a big question. I think this year, i find it unlikely. Maybe even next year unlikely. I think this country doesnt really have a funding problem. It has a growth problem and a like of idea problem. So to some extent i dont think it is a bad that i think theesm money is not tapped. The e. S. M. Money is not tapped. In the meantime, if it means that the government spends more money in paying i think actually it is positive. People underestimate that by increasing the domestic ownership, first of all, it sends a really good message abroad. It shows that i tal families are happy to take the risk. The bond pays a little bit of a premium. It does function as an income support. In a world where bonds yield nearly zero in a country where you know, there are four trillion in liquid assets actually regenerate an asset that yields a little bit more than innation i think is a good inflation i think is a good idea. Anna thank you very much for joining us. Chief economist and founder of a. V. A. Economics. Tune into Bloomberg Radio today at 9 3020 london time for the russels special. The head of the democratico of the european apartment. Coming up, defying the curfew. Thousands of u. S. Protesters take to the streets for an eighth night of protests. Well bring you to story from the United States. This is bloomberg. Matt welcome back to Bloomberg Markets. This is the european open. We are 43 minutes into the trading day and looking at more than 1 gains. A continued rally here across europe and in the u. K. Lets go over to the u. S. And get the latest on the protests there over the death of unarmed black man george floyd at the hands of police. These protests continuing for an eighth consecutive night. They have been mostly peaceful marches and have been taking place despite curfews in cities across the country. Joe biden meanwhile accused President Trump of fanning the flames of hate, the Presumptive Democratic nominee said the country is crying out for leadership. Lets get more from kathleen hunter. What has been the reaction to President Trumps stance regarding the protests, his breakup of the protests outside the white house and his walk across the street to hold up a bible in front of the church . There certainly was a very wide range of criticism that rained down on the president yesterday for particularly the use of force to Disperse Protesters that were protesting peacefully prior to his walk across there to get to the church. So i think that the sense is hat perhaps that criticism has fizzledled somewhat trumps ambitions or threats to use greater military force to put down some of these protests. It seems as though noverbs religious community and some republicans have had some criticism for the president there. I think that has certainly given the white house pause. Anna good morning. Where do they take the country next then . What happens last night . I read a couple of times that things were a little quieter or a little calmer in term turnovers protest activity. Much more focused on protests rather than lawlessness. Ould that be a fair depix . That depiction . That seems to be the case, anna. People are still coming out in large numbers to protest in major cities from new york to washington. There were some accounts of conflicts with Police Outside the white house again in d. C. There was a standoff with police on the Manhattan Bridge in new york city but it doesnt seem like those protests have been escalated to the level they have in previous nights, sunday night or monday night in terms of the confrontations with police and it seems like the looting that we saw over the weekend is not occurring to the same degree or didnt occur to the same degree last night. I think that is certainly a sign potentially, a potentially hopeful sign that you know, perhaps more extreme aspects of these protests are dying down a bit. Perhaps a hopeful sign of that but it is still a little bit early to say that clearly. We have to see what goes on in the coming nights as well. And how the white house react could have an influence on how things go going forward. Anna thanks very much. Kathleen hunter from bloomberg talking to us about the latest in the developments stateside. Wall streets top regulator discussing legislation that could result in the delisting of chinese securities from u. S. Stock exchanges. Gave his take on moving forward to achieve this. The bedrock of our system is good financial information. This asymmetry. You can call it an unlevel Playing Field. It has gone on for too long. First step, lets make sure investors understand it. Second step, the administration is now looking at this. They have a bill that has a very sensible approach to this which is give people time to level that asymmetric or unlevel Playing Field. Now we know about it. Now we have to figure out what were going to do about it. There are now proposals up on the hill. I think the rule is if you dont allow access you get delisted. Do you need that kind of power . First step, exposure. I think the bill you mentioned, the kennedyvan holland bill, it is sensitive because it gives people a period of time to level the Playing Field before we would take any action. Im not a guy who wants to take precipitous hit the nail on the head with the hammer tomorrow but i like the way they have approached it. There is a period of time to come into compliance and if you dont, then it is time to take measures beyond. You have watched this over some period of time. I know you dont want to name individual companies so i wont name any individual companies but is it across the board of chinese publicly traded company or some of the smaller upandcoming ones opposed to the big megacap companies that we all know the names of . You bring up a good question. Financial controls, they are different than they are for Smaller Companies than larger companies. There are a lot of Smaller Companies that have operations in china that are in our markets. Investors might look at those ifferently from the multicaps. Im not an expert on International Investing but i know enough that you shouldnt look at a particular jurisdiction in a monolithic way. You should look at it whether youre looking at a small company, an International Company in der arrives a lot of its revenue from outside of that jurisdiction or Stateowned Enterprises which has its own risks and profiles. Do you talk with your counterparts in beijing, in china . There have been times when the Chinese Government said we want to try to coordinate andujar monoize and open up our securities markets. Are there any signs of that coming about . We do talk. I talk to my counterparts around the world. There is nothing i said to you that i havent said to them. This is a problem that i believe needs to be arrested and i hope it can be. Are you hopeful . Do you think it will . Look, im an optimistic guy but im optimistic because i know at some point you have to do other things as well. You said the legislation is pending. Passed in the senate is it doable . Something that the s. E. C. Could enforce . Oh, yes. It is a sensible piece of legislation. It captures the issue in a way i try very hard not to Tell Congress what to do. It is the other way around. They tell me what to do. This is a very sensible way to approach it. Matt that was s. E. C. Chairman talking with our own david westin. Up next, back to normal . Stocks in europe focus on the reopening in italy, but the p. M. I. Shows slow signs of a recovery. Well speak with the head of our european and live team next. This is bloomberg. Matt welcome back to Bloomberg Markets. This is the european open. Looking at 55 minutes into the trading day. Some continued gains across European Equity indexes. The dax adding another 200 points after put up 430 yesterday. So the german equity index continues to rally with the others. The ftse adding 325 today. Joining us now is christine who lead ours team in europe. Let me first ask you about this optimism in the market. We continue to go higher and higher. Is it about stimulus, reopening . Fewer worries about brexit . What is the story . I think it is a combination of all of those things, matt. There really is a sense that things are aligning for europe in the positive at the moment. Again, as you mentioned, there is a stimulus story and were seeing progress there. I heard it referred to as a watershed moment lots of times. Of course some of the data that were seeing, i know todays p. M. I. s for instance are mostly in line or slightly higher than survey estimates. The fact that they are within the realm of expectations in the market, that helps as well. That the e. C. B. Coming up tomorrow. Lots of prospects for the expansion of the pet program. Lots of reasons for investors to be positive for sure. Anna thanks very much. Talking about the improving data picture. Showing slight p. M. I. Improvement. German may unemployment rising more than expected though. Be aware of that. We are watching germany rope. Italy roping. We have pictures of people quing there. At least able to fly once more. Surveillance is next. This is bloomberg. Protests continue in the United States from coast to coast. Demonstrators defy curfews but rallies are peaceful. Trumps show of force faces backlash. The s p 500 has highs. Italy lifts most of its travel restrictions. Well speak with the Prime Minister shortly. Im Francine Lacqua in london. These are your s