Walking in lockstep as the ecb ramps up with Pandemic Purchase Program and germany injects big money into its economy. Asian stocks and futures throw caution to the wind, setting up for a positive end to the week here in europe. The euro holds flat on its longest run since 2004. Lufthansa is set to be kicked out of the dax after a 32 years day. It will be replaced by deutsches on the 22nd of june. Just under one hour away from the start of cash equity trading in europe. Lets take a look at how futures are trading. If we do have gains today, it is going to be four out of five. Euro stoxx 50s up one point 1. 2 5 . Ftse futures gaining 1 this morning. Take a look at what is going on in terms of u. S. Trade. We see on the s p, the dow, and the nasdaq, all gains. Just about 1 for dow jones futures. The leader among the three benchmarks. What do you see on the gmm . Anna let me just tell you what is coming through in terms of breaking news this hour. Just while you are talking, we have a headline coming through on germany. Closer to your home of course. German april factory orders falling by 25. 8 month on month. The estimate was for a drop of 19. 9 . For what it is worth, that is weaker than the estimate, but as we have seen with many of these data sets, a lot of economists questioning the estimates and validity of a lot of the data we are seeing at the moment. Interesting to see that and also that the Australian Dollar is touching 70 u. S. Cents for the first time in five months so as we move onto the gmm and i am about to talk about a fairly muted picture, there are examples of risk assets doing very well through the asian session. The Australian Dollar is one of those. We see the Australian Dollar up by. 8 and we are getting fx reaction to some of that german data i was talking about. We see the euro actually gaining , up by. 3 . Is that because the ecb more than the market was expecting yesterday. That pushed the euro higher. The explanation was because of the inflation story in part and the weakness of the inflation outlook area that meant there was an urgency to act. Will week data at up to centralbank action add up to centralbank action . We have the Australian Dollar moving higher. We have seen that as a bit of a theme through this week and to the righthand side of the gmm, energy or commodities and brent prices up by. 9 so again, another risk asset doing well. Price over 40 a barrel. Matt. Matt it is interesting. Fascinatingd fx are this morning because you see the euro spiking up against the dollar. At the same time, it is falling against the pound and the pound is rising against the dollar. You think it is a dollar move but you see the dollar rising high against the yen, so whatever it is, we have got those german factory data at the top of the hour and that is when you see on these moves as well, but looking across fx right now, we see a lot of interesting moves here. Downberg dollar index now for seven days in a row, the longest run since september of 2017 so we will continue to watch those moves in foreign exchange. Lets get to the bloomberg first word news. Here are our top stories today. A night of largely peaceful as americans gathered for memorials honoring george floyd, the unarmed black man whose death sparks nationwide unrest. The secret service has extended the security fencing around the white house, putting more distance between protesters and the president. The coronavirus and brazil has reported a Record Number of daily deaths. The nation surpassing italy to become third in the world for total fatalities. Brazil has become an epicenter of the virus with over 600,000 confirmed cases. Latin america accounts for about 40 of the worlds daily virus deaths. Allies are set to extend Production Cuts after a breakthrough in negotiations. A delegate told bloomberg russia and saudi arabia clinched a tentative deal with holdout member iraq. The pair were pushing the producer to stop shirking its responsibility and cheating on the output cuts. The preliminary agreement still needs to be ratified. Global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. Anna . Markets andan equity markets look set to continue the rally. Yesterdays pause, boosted by the double dose of stimulus from the ecb and before that from germany. Peripheral bonds from italy, spain, and portugal got a big boost. The euro is holding onto its longest streak of gains in more than 15 years. Incredible run of gains. Bloombergs mliv currency and rates strategist, the perfect person to speak to right now. See quite a lot of movement in fx markets. Lets start with euro. A big rally on the back of Christine Lagarde in the ecbs actions yesterday, and we again see movement to the upside on the euro. This mornings move is all about the ecb or is that the dollar weakness story . What do you make of it . I think it is a bit of both. As the ecb announced its actions yesterday, we saw the euro tick up mildly. It started rallying after the dollar started sliding. Seen aw, we have tendency in the market for german yields to climb higher. If that keeps continuing, the euro will rally. We see fair value. Lets talk about crude rally. We will get more from our oil reporter, annmarie hordern, a little bit later. How far do you think we could see prices go right now . Good morning, matt. Double in the space of two months, in a sense, that was going higher, but the gains are bound to slow from here on. Why do i say that . Given the impact of the pandemic on the hospital and travel industries, it is not clear demand will be back to prepandemic levels anytime soon and as you mentioned just a while ago, producers have been on the upper if you way up those who factors weigh up those who factors, i dont think they can continue climbing at the price they have been. Anna i want to ask you about the jobs story in the United States. We could sadly see reported later on today that unemployment in the United States has touched 20 or close to it. That is at least the estimate on the bloomberg this morning. What do you think we should watch for, from a market view . On point of if we get a much worse picture for jobs, what does that do to risk assets and also the reverse . If the picture is better than anticipated . Ven great question. We already know the numbers are going to be pretty bad, which is already reflected in treasuries. Unless the numbers are way out of line with what economists are expecting, the markets may to some extent about the numbers. If the numbers are slightly lower, we can expect some flattening in the treasury curve. Stocks could be actually supported. On the other hand, if the numbers are better than expected, but deepening and treasuries may continue. The long and will selloff and stocks may get wobbly. So much foryou joining us. Great day to have the voice of bloombergs my currency and rates strategist, when theres so much action in these markets. Coming up, frankfurt and berlin moving in lockstep. Christine lagarde and Angela Merkel lead europes effort to aid the economic pickup from the coronavirus crisis. Up next, we will discuss the ecb stimulus bazooka. This is bloomberg. Matt welcome back to Bloomberg Markets european open. This is the european open. Minutes away 48 minutes away from the cash equities open, but we are seeing gains across equity Index Futures, and big moves in fx this morning as well. This after the ecb intensified its response to the unprecedented contraction facing the euro area with a bigger than anticipated increase to its emergency bond buying program. The central bank yesterday expanded its Purchase Program by 600 billion euros and extended that program until at least the end of june 2021. Christine lagarde said action had to be taken. We judged that it was necessary to increase the size. There was a unanimous view in the governing council that action had to be taken. In the face of the inflation outlook, and given our mandate of price stability, action had to be taken. By the chiefjoined economist at bnp paribas. Thank you for joining us on this friday. What do you make of Christine Lagarde, the ecb moves yesterday . Pretty dramatic. William indeed. Importantly, there was the extension beyond the end of this year. Theher important point is clarity in terms of the reinvestments of the purchases and that is another very important point. But it also shows is the timing of the announcement shows they are very proactive. If it will be necessary, they will not hesitate to do more, there is really some perspective and support in the economy. Anna good morning to you. You make the point in your notes that there does not seem to be a limit to what the ecb can do here, or at least, maybe there are no numerical limits to the amount of the scheme. If there are no limits, what are the limits of the effectiveness of the ecb, what is the limit of the limitation that they can bring about for the eurozone economy . William you are spot on. The real question is what is the effectiveness by continuing to do more . It does not have any impact anymore. This is a japanese experience going back to 2016, which is also why they introduced birth control. Commitment tonese overshoot inflation target. That is the concern i would have for the fall of this year. Imagine that will be some uptick in terms of new cases, Something Like a second wave developing, and you have the question, ok, ecb can commit to do more, to buy more. The economic effectiveness. The same question will be asked in the u. S. As well. Ecb be successful in trying to bring on inflation . We have heard more ecb members talk about concerns around disinflation or deflation here . William i think it will take a long time. Is an issue of bottlenecks, in my mind. And we have seen before the sustainedhat despite bottlenecks across euro zone countries in the labor market, there was transmission to inflation. Seen such a shock to company profitability, to Company Balance sheets, the last thing that i think companies will be thinking is to increase prices, at the risk of jeopardizing their market shares. This is not an environment that any time soon will lead to acceleration of any significant size of overall inflation. There will be relative price changes, however, in areas where tim ryan where demand is inelastic. Where they will have the temptation to increase to make up for the fact that they can welcome fewer clients because of health reasons. You see thedo missing pieces of the fiscal stimulus package at the moment . We did hear Christine Lagarde make the point again that she needs fiscal support on this. Fiscal support has to now. From european series ofbeen a announcements at the national level. Commissionn Recovery Plan proposal. The discussions, i am afraid, will be tough, will not be easy. At the same time, when you look at the economic impact, it is important because it can make a big difference. Thanks very much. Stay with us. William de vijlder, chief economist of bnp paribas. What we will talk about next, how do you forecast in Uncertain Times and how confident can you really be in any predictions that you were colleagues are making at this point . Or colleagues are making at this point . This is bloomberg. Anna welcome back to the European Market open here on bloomberg tv. A decentooks at for bounce. Lets get back to our guest, william de vijlder, bnp paribas chief economist. I have have you given any thought to how atypical this recession is . It came on very quickly and we talked a lot about how unique this situation is. It is certainly unprecedented perhaps in its depth but i wonder if it will linger, just like any other recession, and i wonder what clues you are looking at to establish what kind of tail this recession is going to have . William very typical recession. One of the reasons is that if recessions based on the sentiment which is not the official way of doing it, this is about the only recession that it is a short one because it is driven by lockdown measures. That is a good use the good news. The bad news is that we have absolutely no idea on the pace and depth of the recovery. Ofre is a huge degree uncertainty if you compare the range of gdp growth forecast for this year and next with the range of gdp growth forecast at the consensus back in 2008 for the year 2009. You are miles away. It is a multiple. You look at earningspershare forecasts for the s p. The description of these forecasts. Inis five times as far as 2009. Matt william, i am looking at this euro area debt to gdp ratio forecast, and it looks like we are going to see an even wider dispersion now of the haves and have nots in terms of nations, and it struck me at the beginning of this session that that is going to be true of consumers as well. The inequality caused by the way this recession started, the income inequality, is going to be staggering after, and we already have the lingering effects of that from, you know, the last recession in resultant qe program. Does this kind of stimulus make it worse . Central bankers will tell you that these programs do not spur income inequality but nearly everyone else seems to disagree. I would its a very say it is inequality all over the place, but starting with households, it is of course a big debate because some households are exposed to equities. Most households are not. On the other hand, you have to take into account the positive effect on the labor market and so on, but talking about inequality, keep in mind that when germany is reflecting its economy and other countries do not have that ammunition to do, it is also going to cause inequality. German companies will benefit from the boost. Other countries will not have that. And so, your chart on the gdp level is another illustration. Keep in mind that the relationship between spreads and debt to gdp levels is nonlinear and that is also explaining why the european has ruled out it has extended yesterday. A key consideration is that aspect. Avoid that. At some point, the market will be obsessed by the debt to gdp ratios and will price an extra risk premium. In service premium. Anna you talk about the price in extra risk premium. Do fromat can the e. U. An Economic Perspective if they have a goal of reducing inequality across borders . What mechanisms are open to them . We have seen the Recovery Fund setting us up for a new phase withmutual ionization debtmutual i station. Ebtmutualization. William we will provide solidarity and commit to reaching the milestones, to use the buzzwords from the European Commissions plan last week, and we will stop being obsessed about moral hazards. We will agree there is going to perhapsillion prospects. Whether that will see the day remains to be seen. I am afraid that it will be whittled down, sadly. Matt william de vijlder, thank you so much for joining us. William de vijlder, chief economist at bnp paribas, talking to us after this really dramatic boost in stimulus by the ecb. We got more stimulus from germany as well. It looks like stimulus is really kicking it all over the continent right now, and that is, to some extent, also separating the Financial Markets from the economic realities of what we are seeing. Nowhere more so than in the United States. We are seeing gains nonetheless on equity Index Futures, both here in europe, and over in the u. S. As well, so look for another day of rallies here. Four out of five days this week if it holds. Four out of five days as well as we get back to levels that are, you know, hitting premarch highs. Of next, opec and its allies are set to extend Production Cuts after a breakthrough in negotiations. We will discuss that with annmarie hordern. This is bloomberg. Anna welcome back to the European Market open. European equity futures pointing to the upside. A little bit of a bounce at the start of trade. As we wait for the job numbers. Let us have a look at some of the things were watching out for today. The latest round of a brexit conclude today. The European Union is pinning its hopes on a dramatic intervention by the british prime minister. We are expecting to hear from the eu chief negotiator around 12 00 p. M. U. K. Time. Germany says sovereign debt is being rated. Chancellorafter Angela Merkels coalition agreed great to a stimulus package earlier this week to boost Consumer Spending and get businesses investing again. And the job numbers as well as the nonfarm job numbers. This is all about jobs. The numbers are expected to be better than april. Million 0 point 5 20. 5 million. We will bring you a couple of headlines from the bundesbank in frankfurt. German stimulus is expected to raise gdp by more than 1 . This year. However, the bundesbank says german gdp will shrink 7. 1 this year. Worse than the 6 forecast. They are saying they expect the stimulus that we have been talking about to help boost gdp by one percentage point. In in 2021, 3. 2 growth and 2022, 3. 8 growth. Those headlines from the bundesbank. Opec and its allies are said to suspend cuts. Annmarie hordern joins us now, what is the latest on this shirking of Production Cut responsibilities . They are goingow to have a meeting this weekend. Theythoughts were that would meet yesterday but for the first time we have russia and the same side. What they have been trying to do in these debates is to bring some of the cheaters on board into further compliance. Including kazakhstan, nigeria, and iraq. They seem to have gotten a breakthrough with iraq but if history is any guide, this could be a fudge. A rack could be making more favorable commitment that they will comply. It is been hard on a rack to do this. Their economy has been battered by war, sanctions and insurgencies. They have been known to be a cheater. They were able to give a commitment. What they will be doing is extending the deeper cuts for one more month. We were supposed to see them start to taper that the deeper cuts they decided on are here to stay for another month. Anna good morning. That is what the supply side is all about. How about on the demand side . The demand side is what everybody wants to know because that is why we saw the prices go negative. Demand distraction as we had the pandemic put cities on lockdown as well as the price word. Things have picked up in china on was back to where we were last year but there seems to be especially in europe and the United States. Tradingto the cohead of and he said he is concerned about the Recovery Time in the western world. He said it will be difficult to get back to 100 of demand within the next year. That means we will not see 100 Million Barrels of oil used each day as we saw in 2019. He said it will take a long time to get back to those demand levels. In the u. S. , we have seen an uptick in gasoline but t cell diesel is at an alltime low. Solutions says jet fuel will recut will not recover until 2026. We are seeing stabilization in the oil market but it will be a long road until we get the prices higher. Said he will be incredibly surprised if he saw oil within this year hitting 50 a barrel or above. Matt thank you very much. Bloombergs annmarie hordern. Business flash news. Leaving germanys dax index for the First Time Since the index was put together. Largest German Company by market value. Is reserved for the top 30 and it will be replaced on june 22. Tesla and elon musk is as the leading his fueled his feud with jeff bezos. Monopolies are wrong is what he tweeted and he tagged bezos. This came after a book on coronavirus was removed from the kindle store. Amazon said it was an error. Are investingres heavily and competing in space exploration. Has purchased a large stake in geo platforms. Thel values jio investments go towards zero. Ces goal of net and that is your Bloomberg Business flash. The latest round of trade talks between the u. K. And the eu is set to end with little progress made. We will talk about that next. What should businesses be doing to prepare . Do they know what to do to prepare . Speak to Allie Renison next from the institute of directors about that. This is bloomberg. Anna welcome back to the European Market open. A solid bounce at the start of the european trading day. Up by 1. 5 . There have been a lot of news around stimulus with money or fiscal stimulus from the ecb here in europe. There are conjectures on when the next stimulus will come in the u. S. And we also are looking for the jobs number and where it they take us. The brexit agenda or the trade deal between the u. K. And the eu. The latest round of talks over the trade deal is set to finish today. There has been little progress despite the key deadline looming. If the transition period is to be expended, a decision has to be made before next month. Renisonus now is allie from the institute of directors. Good to see you once again. Fort a working assumption you that there will be no extension at the end of june . That is what the government has said many times. Is that the working assumption and we assume that something changes at the end of the year. Allie there are some businesses that we speak to who think that it might end up with a different circumstance. [indiscernible] matt we have a forecast from the bank of england which sees gdp falling 14 this year. Clearly, nations around the world are seeking unprecedented drops in growth. What is your expectation . How do you see that Going Forward in a recovery . As with many things come anything connected to brexit is a highly sensitive topic. There has been discussion on whether businesses would feel it any less or more at the end of the transition area. Transition period. I think that is the Biggest Issue for businesses. It is not quite the same thing as no deal last year. Hugehat has potentially significance and implications for more tariffs. A big moving target to prepare for. The most important thing is to enoughre that you get sites of the changes to adjust. Costsise, any increasing no matter how small will be significant and will significantly impact the recovery. Allie, i apologize, we are having some problems with the lines. Sounds like we have some holes in the cable coming from dundee. We will get back with alley renaissance from the institute we will get back with Allie Renison, from the institute of directors. Corporate america speaking out about race. We spoke with Galaxy Digital ceo mike nubber gratz tz about what wall street can do regarding inequality. Its job is to help and to be in support and bear witness and to love our fellow men. Justbroadly, we cannot change [indiscernible] i think it is really important that the Business Community is right there. I am part of the reform alliance. Robert kraft is one of our great advocates because when he talks people say this is a guy that owns a football team. The people listening to him are harder to convert. He is converting people over that might not see the world in the same way as a liberal new yorker sees the world. I think you need an army of criminal Justice Reformers. You need an army of people to say wake up and watch the video. I was kidding around with a friend today i have been arrested twice, i have been drinking and carousing my whole life and not once have i felt trend by a police officer. A moment. To that for i want to get back to criminal Justice Reform but i also want to talk about systemic racism on wall street and how much wall street can be doing more to create equality in this industry. You bill galaxy. 60 some people now. You told my colleague, Amanda Gordon that you are two black people working with you now. You have a chance to start galaxy from the ground up versus these other firms. Why is that . How is that how does that change Going Forward . Mike we looked at ourselves. We are not doing well enough. I am committed. I told our Leadership Team that we have to do better. We will get a black member of our board soon. I made a mistake thinking we were a Startup Company and it is in an industryp where there are not a lot of blacks. I gave myself the excuse. That was a mistake. It is hard. There are not a lot of black president s we have to look a little harder and look at places we are not used to looking. Calling meou for out. We are going to try harder. What can you be doing . Are you working with people and the community to help you address this issue . What kind of support are you getting in terms of finding change . We haveve a path a philanthropy group. On the floor below Galaxy Digital, we spent all day and a lot of money and effort listening to local activists. We have a program called galaxy gives where we have a mentorship and we give grants to six small ngos run by formerly incarcerated men and women. Some black and some white. They are working on issues in the criminal justice system. Floor ofy, we have one my universe fully engaged in this box the company right upstairs, we were less integrated. And we had plenty of resources. , that is not hard. I know a lot of people that would be good board members. You have to work harder to find employees. How do you feel so far given that you are in new york . What do you feel about the mayors response . Mike i think the president s response has been despicable. It has been throwing kerosene on a fire. It angers me. I dont think the mayor has been great either. The governor and the mayor are not getting along. It is time to grow up. We need leadership. It should not matter if you are democrat or republican. The president is not going to do that. It is frustrating. Matt that was Galaxy Digital tz speaking togra bloomberg in a fantastic interview. And the story bloomberg wrote was widely read. Thet now, minutes away from open. A shakeup on germanys benchmark seeing lufthansa slide off. We have been talking about this. Alliel be back with renison from the institute of directors on brexit. We of the line to dundee were stored. This is bloomberg. Matt welcome back to Bloomberg Markets. This is the european open. We are less than 10 minutes away from the start of cash equity trading. Looks like we will end the week on an up note. Let us get the bloomberg first word news. Todays top stories from the bloomberg terminal. First off, fears of deflation warned kid. Warranted. According to the spanish policymaker. Itserday, the ecb upped emergency bond buying program. Cutting expectations for growth and inflation in the process. Lighthizerrep robert says he feels very good about progress of the phase one deal with china say beijing is honoring the pact. His positive view comes despite reset tensions between the worlds two biggest economies. Thousands gathered across hong kong to commemorate the victims of chinas military crackdown in policeen square despite outlawing a mass gathering citing the coronavirus pandemic spread as well as the main vigil in Victoria Park. Many congregated in smaller groups to adhere to social distancing rules. Global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. Anna let us talk about something happening in the dax right now. After a 32 years day, lufthansa is being removed. This year has been a nafta get germanys flagship carrier removed trump this important benchmark. The airline will be replaced by a Real Estate Company. We have seen already in some the morning calls on where the stock will head. For an is with us for more. Beyond the strategy today . Willrd the question is the lufthansa shares fall . Can they benefit from this shuffle . Here, the first is the speculation phase. How will the shares trade . All this there are a bunch of investors doing this right now. The announcement happened last night. Not a lot of changes in the dax. Normally, it is only reshuffled once a year. This is an exemption because lufthansa stocks fell so much. There will be two weeks until the changes are implemented. You will have to make the changes between now and june 22 and some will wait very close to that date. There will be movement this morning as well is in the next two weeks. Matt Deutsche Lufthansa off the dax. Or will be off the dax june 22. The market cap has shrunk by so much. The market cap for lufthansa is less than 5 billion euros and this is after the company euroted a 9 billion bailout. Are there any other changes to the index we should be watching out for . Others. A few it will be promoted. And there are three changes in the index below that. Interesting to note that if you go back 10 years from today one wouldve made twice the amount of money. [indiscernible] thank you very much, richard for bringing us the latest. Forpologies we apologize the quality of that line as well. We will try harder. Keep in mind, the couple of movers in and out of the dax will be one of the things but the over arching been is one of optimism. Haves been a week where we focused on stimulus and we seem to be heading higher. The euro stoxx 50 up by 1. 4 . We will see what happens with the futures market as we get the markets opening in five minutes time. Very important jobs day. The open is up 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 minutes to go to the start of the European Equity trading day. United in stimulus. Walking in step as the ecb wraps up its Pandemic Purchase Program and germany injects big muggy big money into its economy. A positive and to the week in europe. Itseuro holds flat on to longest run since 2004. Be hit offs set to the dax after a 32 year stake and will be replaced by a Real Estate Company on the 22nd of june. The euro i should have said higher by 0. 3 . What do futures look like . 50t futures euro stoxx futures up 0. 25 . Even with a gain in the pound, you can see ftse futures rising. The ftse should be coming out of the gate higher this morning. It is up as you can see from the global macro mover screen. On the lefthand column you see the equity indexes. Based a great while the change is relatively. You see a lot more green on the lefthand side of your screen. Germanys dax up 1. 1 . The french cac up. The i back the ibex also up. Sovereign bonds selloff, the middle column on this gmm screen. Investors no longer feel they need the perceived safety of government debt. Get rid of the paper that pushes up the yields. As wellty Index Futures as equity indexes rising. A stronger open in the u. S. Is expected this morning. Generallyarkets higher after the rally took a yesterday of a cause in spite of the additional stimulus announced by the ecb and the germany and the german government. Joining us now is Peter Chatwell from mizuho. As part of your role, i know you pay a very close of attention to what is going on with the euro, the dollar and we have seen some really interesting moves in fx following the german stimulus package announcement and the ecb boosting its bond buying program. 80 andight now at 113. Getting ever closer to 114. Why so much strength as the ecb extends its qe program . Peter this is not just a monetary package from the ecb. Reductionle risk package. What they are doing is they are the stopgap measure. The ballast holding the euro together until the Recovery Fund comes online. And until the euro reveals itself as having its fiscal capacity of a other major currencies. What the euro is going through is a transition to becoming a genuine safe haven without the tale risk, without the feeling that the euro is miss constructed misconstructed. As we go through that change, there will be a clear of the euro. I think we could reach that level by the end of summer and from there, we will reassess. Whiche positive outlook is the ecb is helping to support by being the glue that holds the construct together. The significance of the recovery on the other hand, with so much stimulus and qe, when i think back to eco 101, i would be worried about inflation. Are the risks to either one larger while the chances of hanging out in this sweet spot are diminishing . Peter i view the risks as being greater on the disinflationary sides. At the time the stimulus is coming, there is very little prospect of that stimulus being turned into an aggressive Investment Plan by companies. Of itis little chance having a good multiplier or velocity to turn the base money andulus into real growth inflation acceleration. I see the stimulus as being necessary to keep the whole construct of float rather than being to keep the whole construct afloat. I view the monetary side of things as being necessary to allow companies and countries to continue to refinance themselves at cheap, sufficiently cheap levels. What i see at the end of this is weaker productivity growth and lower neutral level of Interest Rates but it is necessary to very lowrest rates throughout the euro to keep the show on the road and that is what the ecb will do. Anna you talked about the euro appreciating from here. Given what we have seen with the Recovery Fund being announced this infiscal move, is danger of becoming something that hampers the eurozone if we see political competence rewarded with a stronger currency . Will that undermine the recovery . Peter i do not think it will undermine the recovery so much the massive having Economic Contraction we are having right now. The change in the economy is going to be very positive subsequently. It is worth remembering the size of the economy is not going to get back to where it was in february of this year until , that is the022 ecb forecast and we would agree with that. Actually, there is going to be a preventhink to try to their being other tightenings of financial conditions so the European Companies remain competitive on the global scale. There may be a need in subsequent quarters or subsequent years for the ecb to consider whether there is upside to the euro and whether that is something that is undesirable. They may need to consider subsequent breakups but this is not a consideration for this year. I think what is happening now is we will get this recovery anna thank you very much. Positive. We will talk about the u. S. Side of that shortly. Peter chatwell will stay with us into the next conversation where we will pick up on how the pandemic is keeping its grip on the United States economy. This is bloomberg. Anna welcome back to the European Market open. We are 11 minutes into your european trading day. Right now, a little bit less of again coming through from london. Notstrength of the euro matching the gains of the dax and the cac this morning. Later today, we will get the allimportant nonfarm payroll report. Report is expected to riverdale the most rate reveal the most recent data. The number of people continuing to claim for Financial Support increased to 21. 5 million. Analysts estimated a decline. Peter chatwell is still with us. What will you be looking for from this jobs number in terms of the Market Reaction . Do we start to join the dots between numbers and policy response . Or does that sort of mindset belong to another era . Peter i remember that mindset. Fed quote is so great that if there were to be bad data from the jobs report, and expectations of further stimulus would increase whereas if there is slightly positive signs or less bad signs from the jobs report what the market is trading now is the change is the change and not the level of the economy. If the deterioration starts to flow, the market will view that as positive and i think you will get more going into this risk on is early, it think is going fast but i think there is still evidence of more capitulation to come from this risk on trade. Matt what about the amount of cash on the sidelines . Jp morgan a couple of days ago talked about trillions of dollars out there. The same mantra we heard in 2009 that powered that rally. And he also said that only 40 of investors or investors are only 40 interest did in stocks and they expect that ratio to rise to closer to 50 . Do you agree . Peter i think the logic makes sense. I also see the evidence that cash valances are large. Thereestion will be is still perceived to be enough trade forhe equity people to feel comfortable putting it to work there now . Because we have this coincidence of the macro data bottoming out come it bottomed out earlier this month, and we also have the economic reopening, so i think we have a window of maybe three months where data will continue to improve. And that is going to drive a very supportive backdrop for credit space to keep tatts to keep tightening. You have to think of the macro risks to that and is there a point where the macro risks become greater than the recovery drive . That is what we are looking at now the tradeoffs. You of brexit and other factors. Now, the recovery trade, the cyclical trade is of greater importance. Cyclical tradet runs through a bit of the summer, you wonder whether it narrative of china or could it be around the second wave of the virus . Is a market thinking about what happens if waste dirt to see rates of infection in developed world economies ticking upwards . We are thinking about this and others are. The problem is that it is quite a bad outcome. If there is a second wave, you will clearly expect more policy response. Governments will provide more support. The stricken sectors will once again be leisure. If it does not mean there are lockdowns come if it means more lockdowns, it means retail could suffer. And we what have the decline in the economy. Just as the economy is bouncing back. There is a bad outcome for sure. It is there on the horizon but the probability of that outcome is not increasing whereas the probability of the recovery over andnext three is increasing there is more confidence going into that because of economies exitmanaged to as to lockdowns. There is room for this to run. And i think get to the end of summer and we will reassess and that is when there will be more caution. Evidenced. Tion matt peter, thank you so much for joining us today. Mizuho. Atwell, head of imng to consider going to continue this conversation with peter on Bloomberg Radio. If you are in london, you can digitale in to dab radio. I stream Bloomberg Radio live from my bloomberg app. Coming up, German Chemicals giant basf is named the biggest recipient of virus aid funding from the ok from the u. K. Talk more about that next. This is bloomberg. Anna welcome back to the European Market open. In European Markets are in fine form this morning. U. S. Futures also pointing to the upside. The Hong Kong Financial secretary said he is ready to defend the currency link to the u. S. Dollar with help from the mainland. These comments were made in an interview to bloomberg. The banks themselves and their clients see the merit of this National Security legislation. People are waiting with interest for the details. For the scope of the legislation and implementation details. I do not believe that the positive reaction to this legislation is quite widely held among the Business Community. What do you think will be the immediate and then the longterm impact to what we could maybe call the decoupling . I would not say this is a decoupling but an adjustment in the an adjustment in the relationship between the u. S. And hong kong. I do believe Going Forward we will still be enjoying a mutually beneficial relationship. You mentioned about the special privilege afforded to hong kong. This serves the best interests of the u. S. I do think there are still a lot in common that we can pursue. Without a doubt in your mind, the peg stands . Sure, of course. Because again there is the Nuclear Option donald trump could take and prevent hong kong from tapping into the process and selling u. S. Dollars. What happens . He is unpredictable as you know . Not think we should speculate too much. You must have a contingency. Of course we have a contingency plan but on the other hand, i want the public to know that when we approach this issue and we considered this issue, we do not need to over speculate. 1997 know in the runup to it was discussed that the dollar peg could be swapped out for some sort of renminbi peg. It is not a fully convertible currency. But can you tell me some of those contingencies you are talking about if the Nuclear Option is employed . We dont think we need to do exchangew on the system. We stand firm to defend that and the country will bear us out in the defense of the system. Anna that was paul chan speaking to bloomberg. The interesting thing to hear his thoughts. Let us talk about what is going on in the ok in the u. K. Chemicals company the chemicals giant received when billion pounds, the maximum amount allowed. Why are companies with such wealthy owners tapping a state aid program . Grants and is not money for free come if you like it, it is a scheme where the bank of england is purchasing commercial paper. There is maturity and it is commercial paper. And it is designed to help companies with [indiscernible] and of course, preserve jobs and their position in the u. K. Economy. What is striking is some of these companies have owners. Ilya and her family second told them. Suggest, im going to that you may be heading buttons on your phone unintentionally or somebody is heading buttons on a phone unintentionally. We are going to try to get these issues fixed because this is a fascinating story. The bank of england identifying a lot of Companies Getting the biggest loans from a u. K. Program though they are not from andu. K. Including basf bayer. Add robinson from bloombergs bloombergsfrom wealth team. We will also talk about the Lockstep Movement in terms of stimulus between berlin and the eu. Toare going to discuss how invest after the ecbs stimulus bazooka. This is bloomberg. Anna welcome back to the European Market open. A half an hour into the European Equity session. Up by 1. 3 on the stoxx 600. Up 2 on the cac and the dax. Ibexthan 2 higher on the and the ftse. A lot of excitement about the stimulus in the eurozone. Let us tell you what is going on from a technical perspective. Banks of by 3. 3 . Autos and auto parts also strong gains. As well as the leisure sector. Some of the more defensive, food and beverage, they are also positive but not gaining as much as some of the others. Let us get the bloomberg first word news. The top stories from the terminal. A night of largely peaceful protests as americans gather for memorials honoring george floyd come of unarmed black man whose death sparked nationwide unrest. The secret service has extended the security fencing around the white house putting more distance between protesters and the president. Coronavirus,he brazil has reported a Record Number of daily deaths. The nation surpassing italy to become the third in the world for total for talent hes. Result has become an epicenter of the virus with over 600 thousand confirmed cases. Latin america accounts for 40 of the worlds daily virus deaths. Thousands gathered across hong the victimsemorate of chinas military crackdown in Tiananmen Square despite police outline outlawing a mass gathering as well as the main vigil in Victoria Park which you see here. Many congregated in smaller groups to adhere to social distancing rules. Global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 127 countries. Anna europes monetary and fiscal finds itself moving in lockstep. Angela merkels stimulus package buttresses Additional Central Bank programs. Justified thetion decision to ramp up the emergency bond buying program. Each initiative is substantial but combined, they are quite the show of force. They also suggest that your which has long struggled to show a united front is more than ever exhibiting a sense of collective purpose. Thus gots now is maharajah from j. P. Morgan. The you see a number of collective purpose . In the lasta guest halfhour suggesting we would see a really big appreciation in the euro now. Things look structurally different. Thushka good morning. Hello. I would totally agree with that. See the coordination of fiscal and Monetary Policy in the euro area it will not be a Straight Line to force stimulus but the cooperation has been remarkable up to now. The ecb surprised as positively. In terms of size and duration and in terms of the reinvestment. Alongside the strong fiscal impulse we are getting from germany on a national basis, but also the european Recovery Fund on a euro area basis, this from the ecb is an additional tailwind for european assets. The euro is a strong beneficiary of that i think. Lagardey do you think and the ecb felt they had to do it now . They have not even made a serious dent in the program that already exists. Why at this meeting boosted by another 600 million 600 billion . Thushka that is an interesting question. We were thinking this. Two reasons. Brought down there stock projections to 1. 3 . And bearing in mind this is after they encountered some stimulus measures. The second reason is the financial conditions environment. We noticed the tightening going into the meeting because of the positive announcements we have had on european issuance and the european Recovery Funds but i do real lower inflation rules rates mechanically. And secondly, we have seen a lot more issuance of the ecb was. Rying to calibrate third is we did not know the extent of the virus and its impact on growth. They have recalibrated with the new information. , they are keeping it into the recovery. 2021. Cyclical stimulus. Anna on the fiscal side of things, we have heard a lot about that from germany. What is the fiscal multiplier we will be seeing spent by european governments . How effective will it be impacting gdp . Thushka that is a good question. Things on our view of the impact. One, because there is a large component of investment, the european Recovery Funds, we see the multiplier, the fiscal multiplier beijing higher. The fiscalhave multiplier becoming higher. And the second reason why we think it will be effective over the coming years is it is happening at a time when we have a large stress and low growth. Spending in aal recession would have a higher multiplier. In our view, this is sounding high for our program. Higher than what weve it higher than what we have experienced in the past. Matt we promised viewers insight into what to do with their portfolios as a result of this. How are you changing your Asset Allocation looking at this massive wave of stimulus . Thushka from a global perspective, we were pretty cautious into april and gradually turning more towards biting areas of the market. Like Investment Grade in the u. S. With what we have had from the euro area is on the fiscal front nationally as well as european, now the ecb surprising us, i would say the appetite to take more risk in European Market is increasing. One thing we have been noticing is the cyclical rotation we are getting within equity markets. We think that will continue into the early stage of cycle in european equities well benefit will benefit. And the tailwind of policy. European equities are becoming more preferred within our framework. And the other is peripheral markets. Italy and spain. , we seehorter end strong reasons why we should focus on activity there. Matt thank you so much for joining us. Morgan,maharaj at j. P. Pleasure having you on. Thank you very much for taking the time this morning and we hope to get you back very soon to talk about what is happening right now in these markets. We continue to see gains across europe and in u. S. Futures. The rally is still on. Up next, taking sides. The twitter into spat. Us next. Ova joins this is bloomberg. Anna welcome back to the European Market open. 42 minutes into a positive trading session. Talk about stimulus of all kinds in europe. When of the eu top officials have defended twitters decision to label some of president trumps tweets. She said the move to implement a transparency policy was the right one and she joins us now. Commissioner, good to have you on bloomberg tv with us. You have a clear answer on how twitter is using its moderating policy. What made you speak out on this. goodsioner jourova morning. Why have i decided to be clear about this . We are discussing this platform and the way to make the content legal but also less harmful which is connected with misinformation. And twitter has a kind of following come the ideas we have developed for europe because we to write some rules for the European Union in this area. On american territory and visavis the american president what we are thinking about and i just wanted to support twitter on that. Matt do you think we will see platforms oredia networks taking responsibility for the content that we can see on their website . Nowissioner jourova up to come it has been very inconsistent with how they approach the issue but i can tell you when i was in america in the United States for years ago, there was still a debate about absolute no go for any kind of moderating the content referring to the First Amendment of the constitution. And you see that also american platforms are considering how not to censor but how to label the misinformation or disinformation and how to equip the readers with the facts and figures. So i think we will have to work on more consistent approach and especially for the eu, we would like to have some rules in place by the end of this year. Anna and i think the European Commission is going to issue a commission a communication next week. You could tell us what will be in that communication if you can but you could tell us what to watch for . Commissioner jourova i can inform already now that we are going to announce how we are tackling the issue of misinformation in the covid19 context. There is a lot of information about what has been done, what we are doing now and what we will do. And the cooperation of the platforms has a prominent role in our plan and everything we are doing because we had a very clear agreement with the platforms that they will give some prime time or prime space for the information from the health of authorities from the Health Authorities to give people reliable information and they will diminish the impact of the misinformation that had appeared in massive amounts in the networks. Partials is just a plan. By the end of the year we will propose the legislation which will increase the responsibility of the platforms in relation to the legal content because not all of the content is legal in europe. The freedom of expression is not absolute in europe. For very good historic reasons. Will also announce how to protect elections and democracy against the impact of disinformation. And next week, it will be covid19 related, the fight against misinformation. Very concrete. Matt and there has always been a lot of talk even an investigation into the u. S. Election and the role of media. Rmation on social that played a big part in that story. Do you expect misinformation on social media platforms to play a big role in european elections coming up, for example the german election next year . Commissioner jourova we have to be vigilant. This is obviously the factor that is influencing the will and preferences of the voters. The american president ial elections and some elections regarding the brexit referendum last year we took the lesson last year before the european elections. Againstsified our work disinformation. And also the protection against cyberattacks and so on and we will continue to do so. Matter. Ection in the eu the german elections and any others. We really want to keep the fairions in europe to be competition of real people and ideas. Eals and real we do not want this just to be a competition. Who can pay for certain methods like we saw with the cambridge analytica. Who can pay more for their use Artificial Intelligence . We will do everything to protect the fairness of the elections in the eu. Anna i understand the European Union is considering next apps after germanys top court game that ruling on the ecb. That decisionink by the Constitutional Court in germany means for the ecb . What are the consequences . Commissioner jourova on as far as the legal assessment of the decision itself and the concert once is, we are still analyzing and preparing a reaction which i cannot now tell you more about. But already the day after the decision was taken, we said clearly that the European Court of justice has the last word in weerpreting the eu law and fully recognize the independence the eu lawalso that has primacy over the national on which was already agreed as a basic principle for the eu many years ago. These are the principles which must not be changed or put into question and we were very clear in the very first moments after the decision was announced. Jourova, thank you for joining us and we appreciate your time on this important issue. President for values and transparency talking to us about disinformation in the media. Up next, making money in your sleep. Since the march low, most of the gains in the u. S. Market have come from overnight trading. ,. Will explain why this is bloomberg. Anna welcome back to the European Market open. 53 minutes into the trading day positive in europe. And theures on the dow as mp both higher. While most people are asleep thend the world, or when u. S. Is asleep, the stock markets have been doing their climbs. The majority of the gains have been done overnight adding another layer of mystery. Joining us now to discuss is dani burger. Why are most of the gains happening after regular market hours . Dani these are just easy gains. An easy way to make money. On march at the low 19. You would have gained 25 returns just trading from the normal working hours and then selling before the close, only 5 . Perhaps this does not line up with the fundamentals. Given the risk overnight. The civil unrest, the president ial tweets but it is still making money so at some level, why not do it . It also signifies a return to the way things were before the pandemic and a return to risk appetite. Risky positions showing a willingness to take that on. The overnight position does outperform usually not to the degree it currently is but in some ways, this is a return to normalcy. Anythings the tell us about the durability of the gains from the march low . Dani if anything, it tells us there are a lot of investors out there that this will occur for some time because these easy traits, when they do reverse come it tends to be escalator up, elevator shaft down. Pretty harsh returns. We see this elsewhere in the market. Investors are not buying up hedges and call volume is moving higher while puts are not being bought up which means the ratio bullish options appeared people who think this people who think we should not be seeing the gains we are now did not appear to be willing to put their money where their mouth are while the bulls are making the easy returns. Dani burger what the latest on that overnight phenomenon in the United States. Logpean stocks on the mliv heading for a third week of gains. We see some real strength in europe today. Up by more than 2 now on the dax and the cac. Week the dax started last out at 11000 and now, we are looking at 1700 extra points added in the last two weeks alone. As wellures are rising and they continue to climb higher, bigger than 1 gains on two of the major indexes there. That is it for the european open. Jobs day. Unemployment forecast to rise the highest is the great depression. Opecplus is set to extend person cuts to prop up the oil market. The alliance holds discussions to approve the deal. United in stimulus. Titans are walking and sand as the ecb ramps up production. Well speak to the eu commissioner. Good morning. Welcome to bloomberg surveillance