600 billion euros and extending it out until at least june, 2021. Speaking at a virtual news the president weighed in on the balance of risks and where they are right now. The extent of the recovery will depend crucially on the duration and the effectiveness of the containment measures. The success of policies to mitigate the adverse impact on incomes and employment, and the extent to which supply diversity and domestic demand are permanently affected. Council the governing sees the balance of risks around the baseline projection through the downside. To the downside. What weve also seen moving to , a big move in the italian twoyear. We still seen the euro oscillating around, spiking higher than fading back. Tortoise and of munich. Andrew, thanks very much indeed for being with us today. A huge move at the front end of the italian yield curve. More to come, do you think . Move,ve seen a big todays move takes us back to where we were in midmarch, so almost recovering the whole covid blowout. I think we will look at the combination of the policy responses that have been announced and that are in the pipeline, there could be some further compression. Upsides, a lot of geographical flexibility, and then youve got fiscal adding on top of it, too. Andrew, do you think its ok, the ecb seems to be being pushed around a little bit. There was huge anticipation going into the meeting, and was a little bit of concern that it would disappoint. Projectingshe is more than many would have anticipated. Is worriedk the ecb about disappointing the market, or do you think that is a secondary concern . I think maybe that last question in the press conference , president lagarde would probably say he got off to a shaky start with one of the earlier conferences. She did a good job today in reassuring the market, she was very clear in her communication. At the end of the day, those things are important, but even more important is the substance, the content of the measures announced. It is pretty big and it will be the driving force behind the market actions. Alix of course youre talking about when she said it is not her goal to target spread, that made the markets pretty angry. Nonetheless, she did say that they are too tight. You have a read on what they want to see, they have to be looking at yields and saying this is where we get into a safer place. What is that level . , in manyre looking at of their communications, this gdp weight and Government Bond spread through the curve which basically reduces all of the financial conditions, at least the component of them, from Government Bond spreads into one useful variable. Is something i would describe as waxing a form practicingtrol as a form of lose control. The financial conditions are clearly on part of it that was born and set up to ease the constraints that the Financial Markets were imposing on the transmission of policies to begin with. To mix thee starting word inflation into the description, but i think in practice, think of it as a loose form of control that the bank of hass implementing been implementing for a number of years. Alix so is it just a matter of time until they start buying junk in some capacity . That option does remain there, they have already entered that territory by allowing foreign entities to be of the eligible collateral, the ltros, etc. Theyve done the preparatory work. They would not concerned with fallen angels going forward. Im guessing we wont know until but imhe minutes, guessing that topic was discussed and they look forward to implementing it in the future if things turn south from here. Lets talk a little bit that the law and the fact we find ourselves in a situation where the relationship almost between the markets and Central Banks is becoming increasingly broken. We find ourselves in a situation where Central Banks are targeting things that previously gave market the ability to measure where we were in the world. How is this changing the relationship between Central Banks and markets, and does that mean that markets are finding it our markets broken as a result of that are markets broken as a result of that . Thats a very philosophical question. The ecb officially has got one objective, one target. Its various programs over the have expanded, it is increasingly finding itself involved in a much wider range of the Financial Markets. Saying thaterson once you start on this downward slope, it becomes a very slippery slope. Here we are, 10 years on. The ecb is involved in many areas. As it is developing internal andctives, interim targets, one of those is stabilizing financial conditions. Is, essentially is what it something they are looking at, effectively targeting it, the financial conditions. Step two, trying to achieve the inflation target. Alix so this ties into the conversation guy and i have been having all week, how the markets are ignoring all the bad headlines in the u. S. , and if the ecb continues, does that persist . When does this come back . They can never exit, now. I think how we go forward from here in terms of Financial Markets really is dependent on as wee pandemic pans out go into the second half of the year and 2021. Questions like, will there be a tions asound of infec we head into the Northern Hemisphere winter . Will we develop a vaccine, to real gdp growth normalized back in the postcovid world . There is some indication that maybe its going to be a different than normal thing in the future. Markets are recovering with a sharp, sharp bound from what was a sharp drawdown throughout march and april. How far will this frontloaded fiscal policy pan out . We still got a few tests of us in terms of our Public Health systems and the pandemic. We could see markets retraced some of what weve seen. Retraceuld see markets some of what weve seen. Guy we havent even talked about the announcement out of berlin overnight. We hope to be doing that next time around. Thank you, we really appreciate it. Portfolio management in germany. Thank you very much indeed. What are we going to be doing next . Trying to answer some of those questions. Antonio is going to join us next to give us some answers on the fiscal front. Thats next. This is bloomberg. York, im from new alix joined by guy johnson. Here is your first word news. President trump, former defense secretary jim mattis is condemning him. In a skating statement, he said the president misused the military and is dividing the nation. Trump responded on twitter saying he didnt like his leadership style or much else about him. Meanwhile, President Trump appears to be unhealthy with mark esper. Bloomberg has learned the esperent confronted talking about using the military detained protests. President privately asked top advisers if they thought as per could still be effective esper could still be effective in his position. A controversial rule banning residents from disrespecting chinas national anthem. That adds to fears of beijing tightening its grip on the china triesomes as to an act National Security legislation aimed at hong kong. Angela merkel has agreed on a stimulus package to get the economy going. That has exceeded the top end of expectations by 30 . The deal includes a cut in the value plus money to improve railways and double incentives for electric cars. Global news 24 hours a day on air and tictoc on twitter. Powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Guy thank you very much, indeed. The fiscal story versus the monetary story. The politics surrounding the stimulus package and what needs to be done next is a critical question. Antonio joins us now on the line to give us his take. A number of things have happened over the last 24 hours. Angela merkel has come out with a big second fiscal plan for germany, and it exceeded expectations by 30 . Christine lagarde has now come through and exceeded expectations in terms of the monetary stimulus that was going to be added by the ecb. Are we going to get the third leg, are we going to hear soon get soon that 750 billion euro package . How far away are we, and what are the problems of getting there . Its going to be some time toause Member States have vote on it. Bit ofing to be a little time before we get the package and even the implementation of the package will be staggered over time. Its not like you are going to immediately deliver that amount it is very positive that germany is moving on the member state level. Its very simple, nobody wants to go back to 2010. Alix antonio, what we saw Christine Lagarde do today, does that hurt or help the unity that we need to see of European Countries to get something substantial . It really helps the unity because for the first time in a long time, they are somehow in synchrony with the colleagues. The Monetary Policy is buying time the political leaders need to counter the fallout. I definitely think that what we see today is very positive. Antonio, you talk about 2010, and i remember that really clearly. The ecb did all the heavy lifting and governments did none of it. I guess what alix is alluding to is the idea that if Christine Lagarde says too much, it takes the pressure off National Governments to act. It takes the pressure off been getting together and creating some european deal. Sure. I also remember 2010 very vividly. I think the difference here is that the governments and the Monetary Policy, they are delivering both, right . You need member state governments in each country to implement economic policies tailored to their sectors. You cannot compare germany with where 11 oftry gdp comes from tourism. The samehink this is case in which by removing market pressure, you remove the pressure from government to act. They actually need policies at the member state level. Alix thats a good point. 130 billion euros for germany, or iss like a oneoff, this going to be the start of berlin intervening in the economy on a regular basis and setting the tone for other Member States . We are talking about germany here, we know that everything happens in a very incremental way. The impression is that something needed to be done and actually germany has the passion to implement those policies. I think that it is a good start, but its important for the , theyve andission coming up to germany for 5, 7 years. Both in terms of domestic policy and the larger signal, it is quite important. Guy lets talk about that a little bit more. What has happened in germany . This is an amazing transformation were seeing. Christmas time, they wouldnt spend any money. Bank was nothing that the was going to do, nothing was going to happen. Suddenly, germany has gone from one end of the tech trump to the other and it is turning of the spectrum to the other. Factor, covid19 is a but is this something that is only going to happen in the short term as a result of covid . Is germany going to provide an engine for consumption for the rest of europe to get it going . E ofhis reminds me of on the famous economy sayings, when the facts change, i change my opinion. I think of that as a big part of why the germans have changed a little bit. Huge job and i think merkel is also in the last period of her mandate, she has a lot of leeway. I think she really wants to get ahead of the curve in this situation. Lets be clear, it is not only germany, it is the worth of all countries together in the case of the e. U. And also with policies at the e. U. Level. Thats why theres a lot of different policies. They cannot do it alone. It really has to be culminated, thats what is important. Alix antonio, great to get your perspective. Thank you so much. Thats a lot. Still ahead, President Trumps protest crisis deepens. Next andreak that down what it means in the u. S. This is bloomberg. Alix this is bloomberg markets. A look at some of the biggest business stories in the news right now. What is trying to ensure that its first european factory can start producing cars in about a year. The electric carmaker planning for a plant near berlin. Residents are concerned about deforestation and water usage related to the factory construction. Demand,sing rebound in boosting the number of flights in july 74 from the current schedule. American would still be at only about 40 of capacity. Cruises isbean seeking an additional Royal Caribbean cruises is seeking an additional 2 billion from investors. Raising moneyn is in the bond market. Thats your Bloomberg Business flash. Alix thank you so much. That story to me is kind of incredible. Stock is down 1 , but they can cap the bond market, you know they are paying really the high yields, but it is still open for them, and what we talk about how instrumental the fed is in what were seeing in the markets, thats a great example of it. Guy its fascinating to see how long the markets are open. I think there are warning signs beginning to emerge, maybe that you want to raise your money and you want to raise it now. The situation may not continue forever, and i think Companies May be are taking cues from that and getting out there and making sure they are getting the money in. The other thing i think is interesting, the story between what is happening with the the airlines,and that american story that people are willing to come back and start flying, and so they are having to raise their capacity quite significantly during the month of july. I think thats amazing as well. I just wonder whether or not travel is going to come back a little bit quicker, i think we are going to talk to the chief a little bit later on in the program, so we will focus on that. Alix which should be super interesting. 74 , butr sounds good, that still is the equivalent of 40 capacity from one year earlier. If the market is already betting on a recovery, but the recovery is 40 capacity, that is a different capacity than before, and i feel like the market is still trying to find out what that ends up meeting, despite the fact that weve already seen the dash for cash. Guy they were priced as if they were dead on the floor, particularly some of the airline stocks. Any kind of incremental increase is going to be generating a heavy impact on to some of those stocks as well. , guess you could say the same the way you think about travel, the fact that nobody is getting on a plane. Survivability becomes a little bit more realistic. Weve got another story going on right now that we want to focus online onn find it facebook and twitter. Its a great subject to focus on, we are going to talk about that a little later as well. This is bloomberg. Im in new york, guy johnson is in london, this is bloomberg markets. We do want to give you an update on what is making headlines outside the business world. Americans starting to return claims withless almost 1. 9 people filing for unemployment benefits. It is the First Reading below 2 million. The coronavirusrelated layoffs began in midmarch and the number of americans receiving benefits raised to 21. 5 million. Saudi arabia and russia have a preliminary deal to extend terms, but it is conditional on other countries making deeper cuts to make up for their parts. And a stunning rebuke to President Trump from his defense secretary. Jim mattis is saying the president has divided the nation and misused the military. The retired military general says america is on trajectory to make a mockery of the constitution. It is nottrump said military, but personal, public relations. Money will be cut from the Police Department budget to give more to the black community. The mayor also said he would move forward with other demands from activists. 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. This is bloomberg. Alix thanks so much. Lets take more into the crisis faced by President Trump. Kevin joins us now. Mattis comments were truly staggering and also we heard from the current defense secretary that may be he didnt need the military to squash the protests. What does that do to the psyche of the white house . Divideink it rips open a between house officials and the military, both current and previously serving in terms of strategy. I spoke with a source close to former secretary mattis and what this source told me is there has been tension between President Trump and the former secretary for white some time, so it really is not a surprise that this happened. However, the comments from current secretary mark esper were quite notable, to have the secretary of defense give a press conference to distance himself from the president and then literally that same hour, going to the oval office, im told by sources that it was an incredibly tense meeting. It was previously scheduled, supposed to be a discussion about other International Incidents not pertain to domestic affairs, but as we learn from the White House Press secretary, the president still has confidence in secretary mark esper. Clearly a divide, clearly notable, but a continuation of the past five days. how important the military, the police community, as well as the religious right. I would say this, however, that the political reality in other parts of the country is incredibly different than what is going on in real time in major u. S. Cities this week in the United States. If you look at the republicans who have raised concerns about the president , it has been once again about his tone, and not necessarily about his actions. I spoke with a prominent member of the house yesterday from virginia, and he represents the last district in the United States whoever fully integrate. And what he said was his constituents are not telling him that police and military force and the National Guard should not be called in to have law and order, that is something that resonates with not just the president space, but also with a large majority of republicans. However, and this is where the congressman went one step further, yes, he agrees with the president , but he said he wants republicans work with democrats to pass some type of bipartisan reform as it impacts the police community. He went so far as to suggest bolstering some type of policy that would make it easier to track Police Officers who have in terms of record either abusing authority or making intolerant, racist remarks. On that we believe it, thank you very much, indeed. The race riots in the u. S. , another 1. 9 million initial jobless claims last week. The big surprise came in the continuing claims which came in at 21. 5 million, that basically signaled that the road back to work is turning out to be bumpier than many people would have anticipated. Policy responded joins us now to walk us through the data. Walk us through the impact of that second figure, the continuing claims. The u. S. Economy started to reopen, people may have expected that continuing number to start to come down as people reenter the labor force. They are not. How concerning is it . I dont think its concerning at all, i think wall street misinterpreted last week. The continuing claims have a statistical problem. They are delayed a week, so these are from the week before. Florida and california only report by weekly, so you have big changes, over 600,000 added from california to continuing claims this week, and you get what we saw, a slight increase in the continuing claims numbers. Thats why its got to be going on for a while, we are starting to open up, but we are not seeing a huge amount of Economic Activity yet. A lot of people havent been hired back. What we have wanted to see is if theres any impact of the paycheck protection plan. Its hard to tease that out, but maybe thats one reason we see a little bit less continuing claims then you would see from just adding everything up. Is that theyblem dont include in these numbers all the people who were not eligible for unemployment normally who are getting this time, people who are selfemployed and dig workers gig workers. That is several Million People and 17 states are not reporting those. The level of unemployment is much higher than you get from these topless claims numbers. That the revisions congress made about dealing with jobs, that you dont have to spend 80 or 90 on jobs, how does that wind up affecting the job market . We will have to see as companies and Small Businesses open up. Do they open up with all employment . Theyre supposed to keep people on the payroll under the rules, but if youre a restaurant and you only have 50 capacity, do you need 50 of your workers . That is going to be the question a lot of companies face. Dont forget, the fed still has not opened the program for midsized companies. The labor market is probably going to take a while to heal. We will get a terrible number tomorrow on the may unemployment figures, and then we may see some Rapid Improvement as we open up, but we will still be stuck well over 10 and its going to take a while for that come down. Alix that Unemployment Rate expected to take us 19. 5 tomorrow, thats going to be brutal. Coming up, some parts of the market are doing ok, and that comes with ipos. The pandemic has closed some deals, but it has not stopped some companies from going public successfully. We will break on the numbers. This is bloomberg. From london, im guy johnson with alix steel in new york. Lets talk about what is happening in the ipo market. The biggest test for ipos in several months, some promising results. Really standard given everything going on with the pandemic and the current social unrest, but apparently the ipo market is alive and back here in 2020. Just yesterday, warner music did go public with huge success, raising more than 1. 9 billion. The stock is more than 23 above the 25 ipo price. Also going public, reynolds which is zoominfo indicated to open it 45, more than double the ipo price. And very interesting is the fact that while it feels like ipos shouldnt be doing well, we are basically on track with where we been the last couple of years. About 17 billion has been raised so far, similar to 2015 and 2018, and we also have tons of b and raised through a secondary, about 25 billion this year. Does raise the question, bankers seem to be really Encouraging Companies to raise capital, shore up the balance sheet. This, against the backdrop of an uncertain economy and environment. You have to wonder, do they think that the window is closing . Really Encouraging Companies to go to market now. Alix we appreciate that. Lets break that down. I guess it matters why the ipo market is open. Is it the fed, is it Risk Appetite . How do you think about it . Above, andall of the when you look at the volatility in the market over the last two months and how the volatility is trending, that is probably a ceosng indicator for how and bankers are thinking right now. If you step back, the last few somes have probably showed actuated some prepandemic trends. Some pieces are there. If you are a company that has a can story to tell, that tell very well what happened in march, april, and may, and you are adapting very quickly to the changes the pandemic is bringing along, i think its a very good time for you to go out and tell your story and raise more capital. As you said, shore up the balance sheets. Ifthings get a little worse, a second wave comes or some bigger shock comes to the system. How is pentup demand, there is a kind of sense that we havent seen some of these for a while, we want to get involved. But if more start to follow, how much demand you think there could be . I think if you look at what happening with the stocks, the andbanks and the microsoft large tech companies, they are doing well. Thats the key indicator, there is strong, pentup demand. 2019 on a very high note. Was one of the highest we have seen in the last six years. We thought there would be a continuation of that trend. There is clear supply of the number of companies if you track , there is of unicorns greater supply. I think there is good appetite. Nasdaq is up more than 2 or 3 . Volatility is trending in line. All these factors probably and toward greater demand hint toward greater demand, and as long as you have a good story to tell, now is as good a time as any. Alix i just wonder, as we see this rotation, you look at financials, they are up about 50 over the last month. Rotation out of the defensive, out of the stayathome, maybe into the recovery, does that narrative shift . I think from a tech the trends are probably going to be stronger than what they were prior to the pandemic. Enterprises, their behaviors are changing. Some of them will be permanent, butof them will fade there will be a pocket of those companies that are now shifting into a higher gear in a step up in the curve that they otherwise wouldnt have had prior to the pandemic. Again, not all companies following that fall in that example, zoom is selling Marketing Software to companies that want to sell to enterprises. You cannot travel right now, so what do you do . You need better software. , probablylike that company that are selling travel software and going to go public right now, but Companies Like zoom, companies that have a are definitely going to come to market. Do you think investors are making rational decisions here . Its a question we are asking to a lot of our guests at the moment. Its a question we are asking to a lot of ourthere is definitelye surrounding that with a lot of tech companies. You can see this in other businesses as well, and im just wondering whether you think investors, given their desire to put money to work right now and get back in to make sure that they are at the ground floor, are making rational choices when they put that money to work . There is a little bit of fomo in the market, fear of missing out. If you missed out in the market or april bottom, and probably you are looking at a more accelerated rate, and you have the fear of missing out. That, i thinkd trending is here to stay in my opinion. There could be pockets of fomo, but i think there are companies have the pandemic forcing them into adapting, and they are adapting very quickly. Industriesel tech find those task, dinners that the pandemic is forcing them into. Guy interesting conversation, thank you very much, indeed. What weve got coming up for you, plenty still over the next hour or so. That give you an idea of some of the things were focusing on. Boris johnson is expected to speak at the third Global Banking summit very shortly. We will see whether the Prime Minister is on time. The current state of the race for the vaccine that is so important to the economic recovery is coming up next. This is bloomberg. This is bloomberg markets. Its time for bloombergs business flash, a look at some of the biggest business stories in the news right now. Google is the target of u. S. Investigations. The ceo of a Search Engine company has spoken with state and federal officials. He says he was asked about had to potentially limit googles power in the Online Search market. Who will says it continues to engage with investigations. Over almostsued gap 66 million in unpaid rent. The landlord says they remain in default on their leases and still wont pay back charges. Like many retailers, gap is struggling with the pandemic. The company suspended some rent payments. Health Officials Say the coronavirus pandemic is raising risks of other diseases. The United Nations and the International Red cross say at least 80 million children under the age of one are it risk of diseases like measles and polio, and this in worlds poorest companies are being hit the hardest. And that is your Bloomberg Business flash. Guy thanks very much, indeed. The british Prime Minister is hosting a global vaccine summit toht now, urging Companies Alliance tobacked get vaccines developing countries. I say its really important because there is a great debate raging about making sure that everybody gets access to a vaccine for covid19 in a fair and equitable way. How important is this conference, therefore . You think there is any chance that could happen . Well, the most interesting thing about this with Boris Johnson being one of the people who has been pushing for this is that actually, there are two ways of ensuring that countries can all get access, and one is to create a level Playing Field for the pattern pool. So if there are any profits, they never go to any company specifically. Just as soon as you find something, make it available. Do not license it. The other version would be to license it, so that you store the owner of the intellectual property and other countries and companies have to ask you to use it. What interesting is, i think from what i understood, the u. K. And the u. S. Have been favoring ng, but actually licensing. It would be interesting to see if this changes at this conference area but the fundamental problem is going to have to be manufacturing capacity. There arent alix how do you deal with that . If there is not the manufacturing capacity, its going to be up to the big players to provide that. The argument is going to be that if you pay the money, you get the drug first. How is this going to play out on a political state . I think that companies can transcend that. If you look at what has been andg on with astrazeneca their vaccine, they have started supplies toheir governments talking about what sort of numbers the people want, not just the United States. And yet, they are part of this latest pick by the u. S. Government or President Trump in terms of the vaccine. I think one other thing we shouldnt forget which ive read about, but i dont know how far its at, bill gates and his organization have been talking about building manufacturing capacity. If they own the manufacturing capacity, they can be completely supranational on top of this thing. I think we need that sort of activity first to be able to do that. Alix great points, always good to catch up with you. Coming up on the program, diamond, atlas merging capital and ceo will be joining us with a push and pull between the ecb doing a lot in the market and jobless claims still almost 1. 8 million. A big number ahead of jobs friday. This is bloomberg. Alix live from new york, i am joined by guy johnson in london, this is the european close. Btps. E italian certainly the italian market it has been a massive day four. Above what many had expected. Angela merkel had coming through and delivering a much bigger fiscal package and many would have anticipated. U. S. Stocks are ahead, which is interesting. There are some key stocks on the move today. American airline, well ahead of where it was expected to be for july, putting a lot in capacity. We had a big rally over the last few days. , the seen a big move today bcps have moved