Up to the top of lafayette park, but really it is a nation that awaits the next step from the president. He was out tweeting in the vicinity of 12 00 midnight on general powell. We will talk about that today. It was an eventful weekend and it continues right into this monday. Francine thank you, tom. We will have more on that and now we will get straight to first word news in new york city with ritika gupta. Ritika the u. S. City hit the hardest by coronavirus starts to reopen today. New york city will allow construction and manufacturing at wholesale trade to start operating again. Rios Retail Stores can offer instore pickup. If all goes well, new york and reexpand the can expand the reopening in two weeks. Theggressive proposal from minneapolis city council. Majority of its members say they do this they support disbanding the city police department. That comes as the state launched an investigation following the death of george floyd. One city councilmember says she wants to end policing as we know it. Pricesrabia raised oil the most in at least two decades. That came a day after the opecplus coalition extended its historic output cuts. Overall the increase to saudi good erase all the discounts the could erase all the discounts the kingdom made in its price were with russia. In japan, gdp fell at an annualized rate of 2. 2 in the third quarter, but there is a catch. Theeys probably overstated strength in Japanese Business investment during the pandemic. Third quarter figures may be revised downward later. Global news 24 hours a day, on air and at quicktake by bloomberg, powered by more than 2700 journalists and analysts in im than 120 countries, ritika gupta. This is bloomberg. Francine . Tom . Tom thanks, richie cut. Equities, bonds, currencies, let mes, and the go to the yield market first. The curve steepening, and clearly i want to state we are on the 1 watch on a 10 year yield,. 92 . , 1. 71 percent on a 30year bond. That is correlated to equities come which are riskon, to say the least. Of 18. Dow futures up 85. I would note, one of the great worries out there has been brazil, and the brazilian real has been strong, strong, strong over the last two weeks. Francine we need to spend more time on brazil today. Overall looking and oil advancing, brent crude rising almost to 43 a barrel after this historic after these historic output curves were extended. Iron ore jumping after a brazilian mine suspended operations because of coronavirus. In general, european stocks are dropping, the dollar is weakening, and investors are trying to figure out how much further to take the global rally in risk assets. We will have plenty more on your markets, but we could be the Biggest Health care deal in history, british pharmaceutical Group Astrazeneca is said to e contacted rigo gilead rival gilead about a merger. Is our Bloomberg Intelligence senior pharmaceutical analyst. You are telling me earlier that everyone thought that gilead would be the acquirer. Sam absolutely, francine. It is a surprise from both sides. I dont think anyone expected astrazeneca to be looking for a large deal like this. Not just large, the largest essentially. And certainly gilead was viewed as an acquirer. It is not surprising that it is a surprise. Every other deal we have had in. Erms of mr. Myers, francine what is the likelihood that this will go ahead . I dont know if we will hear from the board whether this will turn into something of an m a work. War, i dont know if there are many others out there who can do this. It is possible that somebody else with a more flexible balance sheet, such as pfizer, could step in and offer something in terms of equity and cash, but we need a deal first. We need the announcement of a deal first so that others can gauge around the parameters of that. But when it comes to how likely it is, you have got to realize that there is reasonable overlap on the shareholder list already come if you look at the top shareholders. Both company ceos know each other. There is no real obvious ftc issue. So if we are going to go down the political path, they be there are some questions there, but i dont expect this to be a major job cutting exercise either. Not many hurdles to jump. Tom sam, you have been doing this for decades. Always within these mergers, they have been these conversations why. Why do they have to affect this transaction . Sam sometimes the answer is because they can. Lets put that aside, tom. If you think about it from astrazenecas perspective, it does need growth. It has that in spades when you look at it compared to its peers. Be ayou it could quicker solution to alleviating cash flow. Cash flow issues. He has been trying to fund r d. For itsas the potential alltime share price to go and acquire and merge with a company that gives it potentially the largest r d budget out there. Idea that the astrazeneca is a unique invention of its own, but is it growth for growths sake . It is not so much a financial raison detre, but is there a reason for this merger given the entire Global Industry . Sam i actually dont think they need to buy growth. They certainly will not be buying growth if they merge with gilead. Iliad is a Slower Growth story. They will get the potential to spending 9 billion a year to 10 billion a year on r d as a combined group. That would be second only to roche. If you are very good at doing r d come as astrazeneca has shown us recently, maybe it is better if you are very good at doing r d, as astrazeneca has shown us recently, ab it is better to do this. Francine sam fazeli, thank you. As new york city begins to reopen today, the first phase of manufacturing and wholesale trade can resume operations. Can also offer curbside pickup. We will have more on what the reopening phase actually means for covid19 and of course what it means for the spread of the disease. Up next, the unicredit chief economist joins us. We will be talking about the fed and about europe. This is bloomberg. Francine this is bloomberg surveillance. Tom and francine from london and new york. Lets talk about the economy and the fed that will meet on wednesday. Thats get straight to erik nielsen, Unicredit Group chief economist. Last week was all about why there was a rally and start markets in stock markets that was not being played out in the fundamentals of the economy. And we have this amazing jobs report on friday, and the other line of thought is that maybe the stock market was following some underlying recovery that we had not spotted yet apart from the friday jobs report. How do you see this playing out . Will certain parts of the economy see a vshaped recovery . Erik here and there we will see vshaped, and we are getting closer to it for sure. That said, i personally think the stock market has gotten ahead of itself, but i have said for a while that i have been wrong. The policy measures are phenomenal in america and in europe, and there is not much that you could buy, so money goes to work. But it feels rich to me. Francine what part of the economy do you see actually recovering sooner than may be we were expecting a couple of weeks ago, first of all, in the u. S. Erik i think it depends on how you think about recovery. There is a mathematical recovery or big bounce in the sectors are the areas that were hit the hardest by definition. If they open up. So naturally, some of the retail is starting to come up again and people are starting to go out and buy, hopefully. There you are seeing something quite dramatic. Truckingeeing in the index, in germany, the tracking of trucks on the autobahn. You are starting to see a sharp vshaped recovery there. The airlines, i think that is going to be a fat u, because people are flying for a long time. There will be a mathematical quick bounce, but my point here is that i think we should expect the local coming back before it will take a long time to get back to precrisis levels. Itom in all of my reading over the weekend, basically with jp morgan, the job recovery on of thewas about 15 recovery of this horrific economy. Is europe the same . Know well, tom, let me take issue with this first. First of all, remember, in normal recoveries, the labor market is a lacking indicator, it is never a leading indicator, so one has to be careful with that conclusion. The other thing, there was so much noise in those job numbers in america. The labor the bureau of labor statistics said there was a miscalculation of one to three percentage points. In america, when workers are reported asthey are unemployed. And for good reason, maybe. Back andcall them unemployment drops. In europe, when you are furloughed, you are not reported as unemployed, youre still on the payroll. We have to be careful not to draw conclusions from that data in this recovery. Is the blended Unemployment Rate in europe . How do you calculate that . Give me a statistic. Erik i dont know how to calculate it exactly, because if you think the furloughed people should be called unemployed, then the number is very high, probably 15 . Im making this up, we dont have the statistics for it, but it is very high. But if you are just sitting home on paid vacation and ready to come back within a minutes notice my point is that this recession, while it is the biggest we have seen since the great depression, the impact on labor and unemployment and Everything Else is completely different from anything we have seen before. See e where do you when you look at the difference between the u. S. And europe, and a lot of the schemes were different. A lot of the help to companies but also to consumers were different. How do you see the pattern of consumers evolving over the next 12 to 18 months . Erik this is a good question, and you are right, the measures are very different. Part of it is also because the economies are different. In america you can fire people and you can easily hire them back more easily, while in europe it is much more difficult. In europe it makes sense where you can defect that you can de facto pay people where you can de facto pay people. Here is the bigger issue. The one thing we know now is in china, when they opened up the economy and started to basically write down the locked down, we saw this big bounce in industrial production, but not in Consumer Spending because people are still scared from going out. So in value terms, the retail phase in china, it is 11 below precrisis levels. So all this rebound went straight into unless you get consumers out in china, this recovery is not going to last. That is one of the key reasons why the germans announced last week the 3 cut for the rest of the year. It is a question of how much you do, that remains to be seen. But there is a real question of how you get people back out to spend. You can get people back to work and produce, but if people are not spending because they got nervous and they want to spend money or take money aside for precautionary savings because they are scared from what happened before, this is going to be a long and difficult road back. Francine is there anything that Central Banks could do that would hurt the economy right now . Know whether not having enough in a couple of months, we are may be seeing a more sustained recovery. , the it is interesting question of what they can do to hurt the economy. There is always a risk. I have never believed in the idea that Central Banks need to nick k x germans need to hold back instruments. We should be talking about how react to a deeper recession so that we are ready once a deeper recession comes. Central bankers say it makes no real good sense. You do what you think is right centralstage, and then banks never run out of firepower. Their only limitations are political, and politics change. Witherik nielsen will stay us. He is with unicredit. We are thrilled that we could have an extended conversation with mr. Nielsen today. I want to talk to you about the european banks. Paribas is one example. Coming up later, michael swell from Goldman Sachs. We will see some of the distinctions that Goldman Sachs sees. Stay with us. From london, from new york, this is bloomberg. Ritika this is bloomberg surveillance. Two drugmakers heavily involved in response to the coronavirus pandemic are considering a merger. Bloomberg has learned astrazeneca has made a preliminary approach to gilead. The deal would be the biggest ever in the sector. Astrazeneca is codeveloper of an experimental coronavirus vaccine. Gilead makes the only u. S. Approved treatment. Airbnb is joining Vacation Rental sites in seeing a surge for demand. It is one of the first signs of life in the travel industry, which ground to a halt in march. Airbnb has more nights booked between may 17 and june 3 than it did a year ago. Meanwhile, the ceo tells bloomberg the company has not ruled out an ipo this year. The dish airways is battling on two fronts, raising the stakes British Airways is battling on two fronts, the union 4400tening to buy all pilots and rehiring them on contracts. That is the Bloomberg Business flash. Tom . Francine . Francine thank you so much, rick tika. This is ritika. This is what the markets are doing. And a lot of the focus is on oil. Dollar declining today, european stocks are declining. Brent crude rising to 43 a barrel after the historic output curves were extended by opecplus. Tom francine, thank you so much. The im glad francine mentions article. Javier blas out with a terrific essay on opecplus and the dynamics there, the game theory we are seeing out of saudi arabia and russia. What is extraordinary th is pushback. Edward morse at citigroup writing a blistering note this morning saying oil is about inventory dynamics and not the Financial Dynamics of the futures market of oil. Really heated note by morris as the 43oil lift up to level. Futures are higher this morning. It will be interesting to see how the vix adapts as we get closer to the opening. There is a sunrise in new york this morning, and it will touch all of this island of manhattan. One of the sunrises will be on Herald Square. Is, whereere macys the macys thanksgiving day parade ands every year, and it is a macys like so much of new york city, trying to open for business. On this monday, new york city making every effort to open up for business. Stay with us. Worldwide, this is bloomberg. Tom good morning everyone. Thrilled you are with us. Dont forget our simulcast coming up. We will drive forward the conversation through the morning. Our chief content officer will join us, with decades of experience on washington. Interesting to see what he has to say on the path forward for president on this. Europe, we have eric nears and we have eric nielsen. Morning atfully this the disinflationary and deflationary tendencies of sweat of switzerland, all of europe, the United States and britain and there is no question the continent of europe is separate from the others and they got a little bit of an inflationary pulse this week in europe really didnt. Why is that . A very goods central question. Think the pause you are talking about right now is more technical than anything else. But the real issue for me is this obsession people have, in europe, that the massive fiscal and monetary stimulus would be inflationary. The next five years or so, i just dont see it and the reason is in spite of all they do, the prevent prices from pushing higher. Had the courage of toomberg economics to go out 2022 and i hear you going out to 2025. How does the Economic System survive with five years of depressed real Interest Rates . There has to be almost social leakages that make that system fall apart. How do we get to 2025 . Erik you are right. The one thing that comes out is we have a lot more Public Sector corporate lot more debt. After the peaks of this debt, you will get a deleveraging period and after that you will have an Interest Rate that is very low. The idea that Interest Rates will be higher for a long time is very low. We have to learn to live with this. It is a real challenge. To thee of the cost Financial System of these very see ines, if what we europe, critical change in fiscal policy, if this is sustained which i think there is a very high chance it is, that is going to help fuel the economy, and thereby give better demand which is better for the financial sector. Francine if you look at a country like italy, is there a concern that because the ecb is Standing Firm and helping countries like italy out, that actually italy and other countries wont push the muchneeded reforms through because you are not seeing that pressure . Erik yes, there is always this risk, but i would say two things. The first, and i get this question all the time, tell me any country that would be in good shape if the central bank was not there for them. It is to various degrees but as we saw on the ecb numbers, they have not deviated much at all. The first thing is, yes, benefits italy benefits from the ecb like all banks. I think you are right to worry about the longerterm growth and the reforms that need to be done in italy but also the other countries. That dont like the idea Monetary Policy somehow should be set to force the hands on the politicians. This is not democracy. The central bank has given the they react and i think the ecb has done a very good job at that. Francine is there any chance that italy will need a bailout out of this . Erik everything is possible in life but i am sure that if italy or any other country in europe needs a bailout of some sort, it is because of Insufficient National politics. It is not because the euro system is incomplete. So long as the country including italy is playing along with european politics, there is no such risk, but of course the andtical fabric can change crazy ideas about alternative life can emerge and then you never know. Tom erik nielsen, that you so much. Right now in new york city with our first word news, here is ritika gupta. Ritika the new york city mayor is trying to lower expectations as the city begins to reopen. He says if they indicated going in the wrong direction, he would be vocal about it. Stores can offer instore and curbside pickup. President trump is facing another defection from a republican. Colin secretary of state powell says he will vote for joe biden. Says byer general threatening to use u. S. Troops against protesters, the president shows he has drifted away from the constitution. President trumps order to pull troops out of germany has rocked the post world war order. It would cup it would cut the number of troops in germany by a fourth. President trump has criticized chancellor Angela Merkels government for not meeting defense spending targets. Finalizingon is plans to ease the country out of lockdown. He will brief his cabinet tomorrow on the next stage of lifting tractions. He promised increased spending on roads, hospitals and research. Global news, 24 hours a day, on air and on quicktake by bloomberg, powered by over 2700 journalists and analysts in more than 120 countries. Im ritika gupta. This is bloomberg. Francine thank you so much. Was previously an advisor to the bank of england governor. We will talk to him about the u. K. And negative rates. This is bloomberg. Tom bloomberg surveillance. Good morning everyone. Fed day on wednesday. We will have complete coverage for you. Interesting to see. One of the things we are looking at this morning is the continued opening or reopening of america. It has been in fits and starts among the 50 states. Certainly a benchmark day in manhattan. Right now, Huw Van Steenis is with us. A good friend from davos. s Government Service to the United Kingdom, he now works for ubs as a special and senior advisor. Wonderful to have you with us. You and i went back and forth on this weekend went back and forth this weekend. In a book, talks about the courage to go ever greater in negative Interest Rates. Is the United Kingdom going to do teensy wayne see teensy weensy negative rates . Huw great to join you. I loved the book but i fear that it may not be the right solution to the problems which confront the country. Therefore i think the odds of negative rates being introduced are a long way off. We have debated before, the policy is at best weekend andily contested weak heavily contested. What concerns me is what does it mean for the Financial System, both here or if it spreads to the states or new zealand where it is being debated. It requires real courage to change the regulations for the system to become less fertile and is there the real political cover to make those changes . Whilek the thesis intriguing was remote and the aboutant thing is, it is confronting inflation with negative Interest Rates. To do that, you have to carefully. I think the market would take flight. For insurers this would not be a great day. Tom i would suggest you and room together. That is a lot of firepower. What is your opinion on inflation . Hyper lowing off nominal at regal levels but should we have a concern about higher yields and a new reflation . Humbledhink we are all by the range of outcomes here as we are looking at the economy unlocking. Lets be clear, there is going to be significant problems with businesses being in difficulty. The range of outcomes is quite wide. Depending on the country, debt to gdp is going to be up by 15 to almost 25 given the range of fiscal measures. Whether we are going to pay for it through prolonged low Interest Rates, i think we alternate a spike in inflations but the u. K. Has a number of issues to navigate this year. I think it is a possibility, but i think even those even though every central bank wants to have a broad target, we are hoping this is not at all. Would be a higherquality problem to have, something traditional for centralbank medicine knows what to do with high inflation and what it is struggling to do is how to stop ultra low inflation. Francine good morning. Do you see the u. K. Developing in the next 12 months . We understand that talks are not going great. What kind of economy will we have if there is a no deal brexit . Will we be skewed much more toward services . Huw we are already confronted with the biggest downturn since the beginning of the 17th century. 1700s. That is a real concern for the here and now. We spent a lot of time thinking through the emergency programs. As the economy unlocks, how will the Furlough Program unravel . The Small Business lending scheme has been a focus, and that has been helpful but lets be clear, it is unlikely more businesses will be able to pay those back. Its a lot of policy questions which are open. I think the key challenge of a hard brexit will have additional why s and that is we are all hoping for the best in terms of reopening even if it is a little bit lagged compared to some of the countries which have had clearer policies. Francine there is a worry about u. K. Airlines. Does the bank of england have a set of tools Strong Enough to basically do the same job, set negative rates without going into negative rates . Huw it is a good question. The thesis we have is that negative rates have one or two Positive Side effects. If you were to go negative, because of the various tripwires in the Financial System, you would want to go gently and slowly. That does not sound to me a long period of side effects is troubling. In retrospect, we have already reached this perverse rate were negative rates are doing more harm than good. At this point we expect very low front end rates. And you striking thing, can see this on the terminal, is how the spike in u. S. Rates in the last three weeks has not been met in the u. K. The u. K. Has been an outlier in not getting that growth recovery. Of both thehammy pandemic and brexit is certainly leaving a lot of concern in the marketplace and the u. K. Looks like a real outlier on the long end of the curve. Tom Huw Van Steenis, greatly appreciate it this morning. The Public Service to to the United Kingdom. We have much more coming at 11 00. Stay with us. This is bloomberg. Francine this is bloomberg surveillance. Tom and francine from new york and london. Climbing to the highest level since 1984. This comes amid an increase in calls to examine the socioeconomic inequality of the u. S. We discuss the prevalence of racial inequality with ursula burns, the only black woman to lead a fortune 500 company on a longterm basis. List, iop of my worry entered this discussion, this debate during the coronavirus, at the start of coronavirus as optimistic, optimistic about maybe coming out of this disruption time in a better position than we entered, and that meaning that people, companies in particular paid attention to what we now call these essential workers and we start to understand what an essential worker is. The guy who delivers food, stocks shelves, etc. Im hoping that knowing a lot of those black and brown people in the United States work at the lower end of the socioeconomic employment letter, im hoping we can use this time to follow toctions, continue reset the whole conversation about how black and brown people letter to the employment and how Companies View these essential employees and how we pay them and nurture them. I am hoping it is an opportunity. I am glad you are optimistic. How optimistic are you about some of the statements being made by corporations . You feel it is authentic across the board . I feel many companies, many more than i have seen before, the best majority speaking out are starting to feel uneasy state of america. They are starting to realize it is fundamentally unsustainable. It is definitely unfair and wrong. To go out ofng balance and is a root and it is really important that the rhetoric and the administration which is generally negative and demeaning, that has to be offset by some action, real action. Funding groups changing employment practices, being affirmative in how they actually address their employment needs, being affirmative in hiring black and brown people, being affirmative in progressing companies. Without that passion and that make, i think we will not progress and companies are starting to realize more and more that not making progress is not sustainable. We have to do something. It is kind of like it all came together at once. This is not enough to make change but if we make enough of a crescendo, debbie we can make the action go. This is not the first time a black man has been killed by a policeman. It has happened before. I hope this time, we wont let this sacrifice of a human go unrequited, unpaid back. It is important that Companies Start to stand up and say we had something to do with this. What makes this seem different to you that the outcome of this is going to be different and more positive than what it was in the past . The number of the broadbased coalitions turning to speak. Starting to speak. Dont take my little optimism as overjoyed optimism. I dont believe what i am going to hear today is going to really drive change. We will have to get involved and stay involved with all the voices in the street, the news, all of the voices of Corporate America going to have to stay involved. The only reason why i am more optimistic is because people are getting fed up with the current state of play. Important conversation on friday. It is a conversation that moves forward into this week as well. Is backdrop to all of this the attempt out of the pandemic to get back to a better economy, that includes a reopening of america. Some states really never closed. Not true of a very hard hit new york city. The courage of our medical community. A symbol of that is always macys and the idea that Herald Square will open today. Another hour of bloomberg surveillance. Good morning. 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. Tom this morning, the reality that we have made back a mere 15 of the collapse in jobs. The turn in the American Economy may come earlier and more strongly than expected according to jp morgan. Maybe it will be steady as she goes. The markets this morning priced in a more rapid recovery. Real haslian strengthened 17 . In washington, the president has quote, drifted away from the constitution. So says general powell. President trump tweets to the general tweets the generals quote, weak and pathetic. Will the president speak to the nation this week . This is bloomberg surveillance. I am tom keene in new york,