Although probeijing officials have said we should not be too concerned, it will lead to stability in the city. 7 . Sci asia pacific down it is certainly something of a riskoff mood, following off what we saw toward the end of play on friday in the u. S. The nikkei is down more than 1 . In the mainland, you have a bit of pressure as well a despite industrial profits up 6 coming in over the weekend for the month of may. On to the next board. We will be looking at the currencies. A bit of dollar weakness. On friday it reached its highest level in four weeks, but it has since come off slightly, leading to a bit of strength for the offshore currency here in china. The korean won is up about plan to 01 . On to some of the commodities we are looking at. Wti has been under pressure as the demand story as we focus on the rate of infections, 10 million infections, 500,000 deaths, you can see that it is lower today. Gold, science that investors are preparing to cross through 1800. 0. 64 . Year yield, futures in the u. S. Are looking a bit more positive, yvonne. Yvonne yes, they have turned positive. We are paring some declines here in asia, looking a little better but still a distant pullback in the region decent pullback in the region. Senior adviser to hong kongs chief executive says trying to oppose beijings law in the city would be in usethose would be a loselose and would not threaten the principle of one country, two systems. When i said that we do not know the exact details, we know the framework of the bill is to address National Security, specifically in four areas, subverting the state power, secession, terrorism acts, and foreign interference. These are the four specific areas the bill targeted. We basically know what it is. Of course, it boils down to the actual interpretation and enforcement. That needs to be determined. Details, ithout the secretary of justice in the hong kong and our secretary of security repeatedly assure us the law will be enforced in hong kong. Under commonlaw jurisdiction. So it is clear that even though the law is being legislated in the mainland, the enforcement and adjudication would be in hong kong. So i have great comfort that the Mainland Authority are taking one country, two systems into consideration. Or they could just enforce mainland security to hong kong. Not. Hey did they know we are different jurisdictions so they would want to make sure that this specifically designed National Security law can apply and work kong. G in the past committee have said you expected the law to have a deterrent effect, that it would not be used as much. But now you are saying that it is really needed in hong kong. So how much do you expect the law, was implemented, to be put into use . Bernard the law is a deterrent factor. I was told that they dont have retrospective effect. It is really to warn people that you cannot cross the red line. You cannot ask for hong kong independence and we do not tolerate terrorist act, like what happened last year during the social unrest. So i tell people abide by the law and we would not have to use this legislation. Another special Administration Region in china passed a similar National Security law in 2009 and so far, from what i was told , not one case has been prosecuted under the legislation. So i suppose that if people behave and do not cross the sidelines, we will never need to use this legislation. We saw a report saying that secession and subversion are very broadly and vaguely defined acts of criminality. That life sentences could be imposed. Can you confirm or deny that . Is that entirely necessary . Bernard i cannot confirm or deny it because i have not seen the details of the bill so i dont know. Seenhen, again, i have National Security bills in other jurisdictions, singapore and thathere, and i believe sentence is very hard in those jurisdictions. Including the u. S. I have not seen the hong kong version. I am yet to find out. About that,orried about these countries putting sanctions and that may hinder business relations with hong , not to mention what happens if the special trading status with the u. S. Is revoked . Is all of this, the law and the protests and the negativity that comes with it really worth it, given hong kongs future especially as a Financial Hub . Bernard as you rightly put it, we are one of the top three Financial Hubs in the world. There is tons of u. S. Interest in hong kong. I will not be surprised to find that half of the Financial Service providers in hong kong are from the United States they could end up hurting their interests if not as much as our own interests. Chan, hongas bernard kong executive Council Convenor , and top advisor to to chief executive carrie lam. Lets get more on the law which could come as early as tuesday morning. Our chinese correspondent, selina wang, has the details from beijing. What did we learn over the weekend, more specific details about this legislation being discussed by the Standing Committee . Selina tom, we know that it is being discussed at this chinasy meeting with top legislative body and there could be a vote as early as tuesday morning. If that is the case, it comes in for the july 1 anniversary of the hong kong handover to china in 1997. Local media have reported the proposed law includes a light sentence for acts as subversion answer session desperate life sentence for acts like includes a life sentence for acts like subversion and succession. The talk among activists is how that is going to be implied, how it will be defined. It will be broadly defined to broadly shut down dissent. We have yet to see the full text of the law, but to state media has announced it would allow beijing to set up a local Intelligence Bureau and take cases. Of some sensitive probeijing officials and the hong kong leader have tried to assure people that peoples legitimate rights and freedoms would be protected, but the law faces significant public opposition. Oppose6 of residents the legislation compared to 34 who support it. Yvonne we have seen the Senate Passing a china sanctions bill over the hong kong issue, the u. S. Putting visa bans on chinese officials as well. Are these largely symbolic moves . Selina we have heard in terms of rhetoric, a lot of criticism from foreign governments criticizing the fundamental blow to the one country, two systems. Of the visa been secretary of state mike pompeo announced, it would ban chinese officials, including retired ones who have been involved in undermining hong kongs high degree of autonomy, they would not be allowed to travel to the u. S. While it is largely symbolic that those officials will not be troubling to the u. S. Given the pandemic, the travel ban, we are told, is the stepsstep in many the u. S. Is planning in terms of punishing china over its actions hong kong. There has also been intense debate in the Trump Administration about how hard to if youchina, given that are stripping hong kong of its special trading status would send a message will also damaging both sides. Wang, our china correspondent there with the latest business lets get the first word news. Retail sales in japan rose in may for the first time i sinc february, adding to size the Coronavirus Impact has passed. It. It was 2 , less than the 3 rise expected. The overall trend is seen staying week. South koreas finance minister will doubt need for a fourth extra budget, and said to the economic shock from the virus pandemic may have bottomed out. He says they can make it still avoid its first and will contraction in more than two decades first annual contraction in more than two decades. Profits rebounded in china last month for the First Time Since november, signaling the economy is finally recovering from the virus checked on. 6 . Its rose the Statistics Bureau says the improvement is jew to smaller Cost Increases russian president Vladimir Putin is expected to easily win a constitutional vote that would leave him in power for up to 60 more years despite weak ratings amid a slumping economy, falling oil prices, and the pandemic. The vote, close on wednesday, with little doubt he will be given authority to seek a new term. He will be 83 years old when the new mandate runs out. Global news, 24 hours a day, on air and quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. I am Karina Mitchell. Tom thank you very much indeed. Still ahead, claudia kwan on why she still likes tencent, despite its resent run to record levels. Are amid rising fears of a resurgence in covid19. This is bloomberg. Tom welcome back. Said morevirus has grim records, with global death topping 500,000, and infections surging past 10 million. Our next guest says the recent spike in cases, including those in the u. S. And here in beijing combat may not have a similar negative impact on markets as they did in the first quarter. Seth, from in neeraj blackrock. How much of that view is tied to the actions of central banks, and would you expect the fed to be contemplating additional measures in light of the outbreaks and the increasing infection rates we are seeing in the u. S. . I dont expect as much of a market reaction. There is a reason to be cautious with the spread of the virus. The resurgence in terms of the number of cases. But you want a combination of the central bank policy, the fiscal stimulus we have seen, as well as a basic understanding among people in terms of a social norms. Now, would we see more action from the fed on the back of these cases . I dont think so, i think it is too early. The fed has put a tremendous amount of stimulus in the system, let us come alongside the monetary, so overall i think we will have to see the combination of fiscal and system. Works of the and i dont expect anything immediate coming on the back of it . Tom as investors look to the second half and take into account the increase in infections particularly in u. S. States like texas, florida also in tokyo what are they telling you about how they want to represent and for the second half . How much effort it is therefore fixed income at this point . Neeraj over all, there is still some caution in terms of investors in terms of the allocations, the idea of building resilience in the portfolio has never been more important. I dont think that is going to go away. But when you think from a fixed income and credit perspective, we arehe level of rates and the expectation of were rates will be in the coming years credit is gaining a lot more attention in terms of allocations. Something we see becoming a mainstream asset class. It will be an interesting time but we see an ac uptick in the default rates and in the global highyield markets. You will see credit as an asset class gaining more importance in the second half of the year and in fact longer than that. Yvonne so, for those looking for yield right now, what areas of credit you see where spreads can tighten further . Neeraj lets start from a global perspective. I still think there is value in u. S. Investment grade and highyield. We have seen a meaningful amount of retracement from the march selloff. Given the fed positioning, i think there is still value in that space. From a global perspective, european credit is still very well placed given the ecb support. Spot,ctually is in a safe where a combination of the quality in yield and lower riskoff, i would argue the default trades relative to the global, the rest of the emerging markets. The pickup we are seeing in asia relative to the u. S. And europe. I think you would see, not in a straight line, but potentially a continuation of some rate compression in asia in the next 612 months. Yvonne i know that china is an of the market you look at as well for opportunities is one of the markets you look at as of opportunities. The selloff of government that has taken a positive the last couple of days, but does it push you to focus on the offshore market . Where are you seeing opportunities in china . Neeraj i am positive on both onshore and offshore markets. Offshore obviously has been one of our strong conviction sales in the last 1824 months. We remain comfortable with overall positioning we have in and investmentes grade credit. Onshore is actually getting more interesting. With the backup in the rates that we have seen, we still like the onshore rates on the back of improving technical valuations. We see a lot of dispersion picking up in the short credit markets, which is a lot less of a focus for global investors. I think onshore markets given adthsize and the bbre of the market, provide ample investors . Es for tom you talked about valuation and thisdriven opportunities in india. Walk us through what that means and what you are looking at in that market. Bernard over all we are positive neeraj india, over all, we are positive. There is a risk operating down great going up. To junk in 2020. But the fiscal and that levels will define the risk. In terms of value, we like Investment Grade credit in asia. Selective invery the rest of the highyield. Arket in india but from a technical perspective, it is worth highlighting that india is a very small part of the index. 6 of the asian credit index. Yvonne thank you so much, neeraj seth, from blackrock. You can catch up on our interviews by using our interactive function, tv , and also you can send us instant messages during our shows. Or if you have a question for our guest, feel free to send it our way. Make sure to check it out at tv. This is bloomberg. Tom welcome back. Here is the latest business flash. U. S. Show this cheerleader, chesapeake energy, has become one of the industrys price crash victims, filing for bankruptcy as the coronavirus devastates wide parts of the economy. It has a play for chapter 11 protection and is entering a deal to eliminate 7 billion in debt. Chesapeake is seen as vulnerable to the ship explosion that has contributed to the Global Energy glut. Tencent is preparing to make a into American Social media, rolling out a Live Streaming service to miller to amazons twitch similar to amazons twitch. It has been testing a Service Since march which is now branded as trovo live. It has tencents own portfolio of games such as fortnite as well as titles like grand theft auto and destiny 2. The federal Aviation Administration has approved a test flight for the boeing 737 max after a comprehensive Safety Assessment of the multiple fixes made. The testing is scheduled to begin monday, more than 50 months after the plane was grounded because of two fatal crashes. The f. A. A. Says it is yet to make a decision on the 737 maxs potential return to service. Lets take a quick check of the markets. We had entered the session in asia with a riskoff mood. That has been slightly pared around the edges. The Msci Asia Pacific index is still down close to 1 . China also down. 06 , opening for the First Time Since the twoday holiday on the stand friday. We have stories around the securities brokerages. Indian features as well are in the red. The japanese yen currently at 107, offshore currency strengthen a little bit, just a little over. 01 , the u. S. Dollar slightly up, and the aussie showing some strength. A tightening story in china is the Company Continues gradual improvement. Looking at some of chinas brokerages, securities companies, in the red firmly on the back of the news that regulators are looking at issuing brokerage licenses to some of the commercial banks in china. And a market share of again will only be gradual. Nonetheless, investors are not pleased about that report of regulatory changes around the banks being issued brokerage licenses. Plenty more is coming up, great interviews, including with claudia kwan. This is bloomberg. 10 29 a. M. In beijing and hong kong. 10 29 p. M. In new york. Global coronavirus cases have broken through 10 million. Warnedauthorities against reopening too quickly. President Trumps Health chief sammy window is chief saying the window is rapidly closing. Vice president mike pence saying that the u. S. Is wellplaced to respond. Travelers. O ban a draft decision, 15 countries set to be given entry, and that does not include the United States. Chinese travelers will only be allowed to enter the eu if european citizens are welcomed in the mainland and return. Virus inspections have soared in japan since early may, breaking a key threshold level. 57 new cases were confirmed saturday, more than a month after japan lifted its state of emergency. The government has abandoned trying to wipe out the virus, focusing on limiting its spread as National Travel at interNational Travel resumes. Protests returned to the streets of hong kong as lawmakers in china are said to be debating new security laws for the city. They will vote on tuesday, the day before the city marks the anniversary of its return to chinese control in 1997. Hong kong police have refused to permit the annual july 4 march in the city, citing social and potential violence. We are off some of the lows of the session here but we are basically contending with this resurgence of cases around the world. Then we have come on the others, better data out of china with industrial profits as well as the vietnam gdp numbers to the upside. Pretty much, slightly lower to the asiapacific. Manila still seems to be the culprit, falling more than 2 . U. S. Futures have reversed those losses and are edging higher. Nifty, seems like we could be following in this downtrend when mumbai opens in the next hour or so. The resurgence in haven demand seems to be taking a pause. The risk on trade, also going to be seeing some strength as well. You see that with the taiwanese dollar, strengthening quite a bit. We are watching, when it comes to other assets like the u. S. 10 year yield, that remains unchanged. Wti stille and heading lower, still seeing some slippage. Appear today. Virus cases surpassing 10 million globally. Sentiment seems to be returning. About thee optimistic second half of the year. U. S. Interest rates and the prospects of a sluggish u. S. Economy through the summer, you wonder if the dollar will weaken. I think that would be very good for the emerging markets. We definitely think the big tech picture is still intact in terms of gold. The Health Care Sectors have been left behind. We do see a bit of opportunity. Two positives for the china a share. Bythink primarily driven economic recovery and secular trends. Currently, we are overweight and andth care, industrial consumer discretionary. Theets look at some of stock picks. Claudio, always great to have you. You just heard a string of voices there. People up eight compared to the rest of the year. What are some of the key themes you will be watching out for . I have been looking overall at economic activity. If it keeps improving, we think the market should hold. Obviously have a kenai on have a keen eye on this activity. We are on the page of quality and we think that the recent virus increase will perform better compared to the resilient business models. Just looking at your stock pick, they are very much asia tech focused. As technology shifts, how are you wellpositioned now among the changes we are seeing in technology . Do you focus on the changes in 5g, cloud tech, or ecommerce . We have a few. Own a 5g space, we company in japan. There is positive news that ntt took a 5 stake. Entities operating worldwide internet network. That really endorsed it as a 5g player within japan and potentially to take market share outside of japan. We have a play on digitalization of Health Care Sector as they do online consultations. We like the gains the games and music sector. A little bit more focused on those areas within the tech and internet space. Your views on tencent, it was a big corporate story last week. The richest man in asia as a result of that. As china gets back to work, and that work from home phenomenon starts to ease on the mainland, is there concern that people will start switching off and the stickiness around gaining will start to ease for tencent. I think that is a key concern. At the weekend, you had tencents annual games conference. I think most notably the digitalization sorry, the mobile games. You saw a launch date of august 12 for mobile fighter, which aligns with their quarterly result earnings date. This game has, as of yesterday there is so estimate that might monetize it one billion u. S. Dollars for the first year of annualized gross revenue. I think there is some concern but a lot of lunches. Notablyelopment houses, japan, the pokemon company, i think there is attention on a competing product to amazon twitch. I think there is a lot of catalyst for that to support the company into the second half. The normalization of revenues into these upcoming earnings and the increased costs, together with these Technical Levels, like you said, i think the share price bumping up against the 500 hong kong dollar level has been a key resistance level. We have seen it more expensive at the beginning of 2018. I think it is not impossible we could get there at the second half given what we have talked about with the game catalyst as well as liquidity. We are quite constructive into the second half on tencent. How much success is nessie having in monetizing Online Education and Music Services . Them,also are an owner of and they have seen increasing monetization in the music hub. The market now is a bit more of duopolstick market istic market. The paying ratio of music in china is a lot lower versus mobile games. Netties will be a key beneficiary of that. If there is a key hit, instead of the competitor releasing at a cheaper price, the thought is that they will release at the same price, which increases the economics of the industry. So we are quite constructive and have a position as well in tencent music, just better improvement on the market rationality. How are you viewing when it comes to chinese regulators and the meddling we have seen so far. It seems that they are increasing the scrutiny over content. Just last week, we saw that they suspended some of the livestreaming apps, the services backed by tencent. Is that a concern for you . Absolutely. That will always be a key concern. Something you have to keep a keen eye on. Comments from management about how they are addressing that. Really, it is probably the highest risk. He really ought to look at it in a sense that this is why these Technical Levels are quite important. When you saw some of these risks materialize, you really have to stick to the valuation. Athink most people would have keen focus on. Thank you for joining us. Claudiaasset analyst kwan. Coming up, boeings grounded 747 max is set for key test flights today. This is bloomberg. The dutch arm of air france, 4 billion in state backed commercial funding and government loans. The deal ties the carrier to wideranging operational and environmental constraints. We are clearly facing the largest crisis we have faced in aviation history and also for our country. In the last 100 years, this is obviously the largest crisis we are facing. What i find interesting is , the ownership by the nation of france, the nation of benevolence. Twoou see that the governments are on the same page as you are and also the management of air france . Today, the dutch state announced their support into klm with a Credit Facility totaling 3. 4 billion euros. That is following by the french government two months ago, supporting air france. It is important that we have that loan and Credit Facility to start making the necessary restructuring and ensuring that recover. Le to do you worry there is a level of mistrust . Both countries basically give aid separately, then there is a state agent appointed to check whether the dutch Governments Company goes to klm or air france. Consolidation, very different than the consolidation in the u. S. , by definition, the countries are supporting their carriers with loans. To defendtries have to the public the good spending of taxpayer money in terms of providing a loan, they want to ensure that the conditions are attached to that. We have conditions with the dutch government and the french government. Does it create a level of unrest in the francodutch company . Is there an element of distrust . On the contrary, it is very important for us. We have demonstrated over the last decade that the strength of the Air Franceklm group, we run a very successful strategy that also across the atlantic, we have a very strong cooperation with our friends from belfast. Today, going through this crisis, the fact that both airlines are supported by the government is strengthening it rather than increasing the level of distrust. We keep hearing from michael oleary. He is frankly pretty mad about these bailout deals. He is calling for the eu to block it. How would you respond . I understand that oleary says that. But that is precisely why the European Commission has established a very clear framework. These interests are to be endorsed by the European Commission in order to ensure that this does not disturb the level playing field. Yes, there are conditions attached to it in sustainability, labor conditions. It is the conditions applied by the European Commission as well as the national government. It is not a free ride. That was klm ceo peter elbers. U. S. Regulators have approved a set of test flights for the grounded boeing 737 max that could begin as soon as monday. Lets get our details from our asian transportation reporter. How significant would this be for the max . , wet definitely looks good have been going through a month where we are trying to figure out when the test flights begin. This is definitely a good step for boeing and the max program itself as well. When it will happen, you will have to find out. If these flights are successful, how soon could the max resume flight . And what if they are not successful . , but is too early to say the faa and boeing have been going back and forth on the documentations, the revisions that have been made on the software. The changes after the flight itself. The next step would basically be faa making its verdict and how that verdict goes with other regulators around the world. When the 737 max, other regulators will have to look into this as well before they make their own decisions. Asian transport reporter k yunghee park with the latest on the 737. Play more coming up including the latest on infections and how the market is weighing out that information. This is bloomberg. Lets bring you a quick check of the latest business flash headlines. Microsoft cloud partner 21 environment is considering a a vianet is considering second listing in hong kong. The company, which is now worth about 2. 7 billion. Wonier this month, 21vianet funding from blackstone, making it one of the largest institutional shareholders. Abandoning restrictions on passenger numbers imposed during the coronavirus pandemic travelers will be notified if they are booked on a grounded flight and will have to certify that they are free of symptoms. Now toturn our attention one of the worlds top oil exporters, kazakhstan. Kazakhstans economy has been hit hard by the drop in crude prices. Trade figures are also do today. s get more from theis the how has coronavirus pandemic affected the kazakh economy . Stabilizing global oil markets, forcing the kazakh government to revise the growth to zero point4. 1 to 0. 9 . Package, the effect on government coffers. The kazakh government now has to race 3 billion in foreign debt. Kazakhstan depends on the commodity straight, especially with china. Theyou give us a sense on size and scope of the impact on that sector . When the economy goes into lockdown, reduced demand for energy and raw materials. It would reduce gas exports. Cutkhstan gets some supplies to china by about 15 . And iron or,pper also hundreds of thousands of 2019 to justil of hundreds of tons in april of this year. Someings bans on Agricultural Produce from parts of asia and america ultimately benefit kazakhstan . Azakh kazakhstan was already major exporter of grain. A focus on meat, oil. However, only 10 of these exports went to china last year. Imports from australian and American Produce may come in handy for the government. Kazakhstan hopes to fill the gap. A now that china is building new silk road, does the pandemic undermine kazakhstans plans to become a transit hub between china and europe . Over 12stan has spent billion expanding his Railway Network for conductivity between china and europe to turn kazakhstan into a transit hub. Goods travel overland much faster than by c. By kazakhstan increased last year. However, should european more protection and over chinese imports, the Chinese Government could take a hit. Aubet bisenov, thank you for that update. Lets quickly check in on markets before we end this hour. China opening up after a twoday holiday. Digesting the industrial profit data out for the month of may. There is still this risk off sentiment here certainly. Hsc i down 1 . Deliberations continue here in beijing. Futures in the u. S. Looking slightly more positive. Plenty more ahead. This is bloomberg. It is 11 00 a. M. In singapore and hong kong. I am haslinda amen. I am yvonne man. This will set redlines that cannot be redlines that cannot be crossed. Toplobal coronavirus cases 10 million well deaths top 500,000. Health authorities continue to warn against reopening too quickly. Max the faa insists there are no timelines for certification. Haslinda taking a look at the markets, mostly lower. Thatve investors worrying rising bearers cases will hamper the Global Economic recovery. Think of america is saying that the market is currently stuck between improving macro data like what we saw this morning and that surge in covid19 cases. U. S. Futures reversing those losses after slumping 2. 4 percent on friday. A twoweek low. We are waiting the fed chair powells testimony on tuesday. It is coming back after a twoday higher day holiday. Profits rose for the First Time Since november. This as the economy continues to recover from the shutdown. Still set for the biggest advantage in at least 10 years. Itsh korea saying that third budget will be the last this year. 0. 1 percent growth is possible. Look at where we are in terms of Southeast Asian markets under pressure as well. Benchmark Southeast Asian index down. Expanding his budget to a record 193 billion to fight the virus. That may help with profit growth. The sti is down. 8 . The governor says he stands ready to use all tools after the surprise cuts last week. Yvonne we are seeing a bit of a retreat across asian markets but we have seen the dollar take a pause in its resurgence after it clocked three weeks of gains as investors flocked to those havens. You see strength across asia affects. Asian fx. Youre seeing a little bit when it comes to the aussie as well. Indian markets trading this hour, we are looking ahead to what we see here with continued downside when it comes to the nifty according to futures there. Down about. 7 . It could be joining this downtrend here today. The last trend and it comes to the rupee was around 5. 64. When it comes to the india yield, it is up. 02. Karina virus infections in japan have soared since early may, breaking a key threshold level for the governor. 57 new cases were confirmed saturday. More than a month after japan lifted its state of emergency. The government has abandoned trying to wipe out the virus, focusing on limiting the spread as interNational Travel resumes. Cases in tokyo have top 6000. Surprised,conomy has unexpectedly expanding despite a slump in trade amid the coronavirus. To thee. 36 compared same time last year, leading average estimate of force casted estimates have forecasted a contraction. South koreas finance minister has ruled out the need for a fourth extra budget and says the economic shock from the coronavirus pandemic may have bottomed out. The economy can still avoid its first annual contraction in more than 12 decades. Aboutvernment has pledged 235 billion to help the country. Protests have returned to the streets of hong kong, lawmakers in china are debating a new security low for the city. The National People of congress will vote on the legislation on tuesday, the day before the city marks the anniversary of his paternity chinese control in 1997. G kong police have refused they cited social distancing and potential violence. Mobile news 25 hours a day on air and on quicktake by bloomberg. Powered by more than 2700 in morests and analysts than 120 countries. Infections are continuing to rise in developing countries and the u. S. Deaths have passed 500,000 globally. Infections are rising fast 10 million. Past 10 million. What is behind the recent resurgence in the u. S. . What are the hotspots . The simplest explanation behind the recent resurgence in the u. S. Is the people are not taking it seriously. You have a lot of businesses that have reopened ahead of some guidelines that tickle experts set. There has been a very large push to get back to business as usual as quickly as possible to stem some of the economic worry. Then you have the political consideration that people make and they say they dont want to wear masks so they dont. The u. S. Is taking a very different strategy than the rest of the world. It is facing unique results. Almost different than anywhere else in the world. We are sitting here and talking some of the surges in infections. A couplelking about dozen others. Texas had more the other day than portugal has had the entire pandemic. That is the scope youre talking about. That come up and timeframe, a certain you clip an entire countrys margins. With a staggering sum thousands and thousands of deaths. Yvonne what is the right response . What can the trumpet administration do now . Derek the Trump Administration is having a certain amount of difficulty with this. We did see some change. Mike pence suggested the people should wear masks. That was a big move. You do see some of that. President trump has been very hesitant to show himself wearing a mask or to put out that kind of guidance. I think you will see a lot of this on a state level. Texas has checked down a lot of their reopening is. Youre starting to see some contractions. Youre starting to see some instructions build in. See that goingl forward. I think you will start to see a certain tightening in a lot of these places. People might say this voluntary compliance is not necessarily going as we had thought it might go. We are not getting the sort of response there. We will see a certain tightening. How tight that gets, it is hard to say. Youre looking at some of this voluntary compliance. Let me check myself on some of these numbers. Youre seeing some numbers in each of the states and each of the cities in the u. S. As a orders of are magnitude bigger than you are seeing in other places where they take even tighter measures. What will that mean for elections in november . How will this play out . I think that is really smart them to be thinking about. President had been walking into 2020 with an idea that his campaign was going to a you may not like my style but you cant argue with the result kind of thing. With the un employment rate going up and up, it is hard to make that same case. The president very month very much once this economic restart pollsh as possible but show there isnt a great amount of confidence in president trumps handling of the virus response. Even as he gets better marks on the economy. To the extent that the virus continues to weigh on the economy, that is probably not a good thing for the president. Yvonne still to come on the show, World Management tells us why it is betting on asian equities with a focus on india in particular. We speak to the head of a peck equities in just a moment. Pac equities in just a moment. This is bloomberg. The top legislative body will vote in hong kong on Hong Kong Security legislation on tuesday morning. That is according to now tv news. Aging may handout a measure measuremay hand down a that some say road freedom. Erode freedom. I have great comfort that the mainland a third have taken to the one country to system when they drafted this bill. Otherwise they could just enforce the mainland National Security law to hong kong. Lets cross over to selina wang in beijing for more. What new details have come up . What has emerged about this proposed law . It is currently being discussed at the National Peoples congress Standing Committee. It could pass. If it does, it would come just ahead of that symbolic anniversary of the handover of hong kong. The activities and subversion in this proposed law could include punishment of a life sentence. That is more severe from early reports that have said the it would range from prison sentences of three have been 10 years. The big concern among activists is how these crimes are going to be implemented, interpreted and defined and if theyre going to be broadly applied to shut down dissent. Even though we have yet see the full text of the law, the media has made it clear that this security low would override the hong kong local law. It would allow beijing to set up a local Intelligence Bureau and take over sensitive cases. We did speak to bernard chan who said that the low would not be retrospective and that Hong Kong Foreign judges would be allowed to rule on sensitive cases. What backlash are we seeing from foreign governments . Tickle early the u. S. Particularly the u. S. . Sinc selina this move is really symbolic. Given that chinese officials are not likely to visit the u. S. On chineseuld be officials coming to the u. S. According to a state Department Official that we spoke to, this is just the first step of many steps the u. S. Is planning in terms of punishment of china measures in hong kong. The senate has approved a measure that would penalize doing business with china during this National Security law. Resources have also said that there has been an intense debate within the trumpet administration about how to handle punishment of china given that stripping hong kong of his trading status would send a strong message while also damaging the hong kong and global economy. That was selina wang with an update. Up next, the possibility of more coming from the worlds biggest economy. Keep it with us, this is bloomberg. Lets do a quick check of the latest business leisure lies. The federal Aviation Administration has done acquitted a set of test flights for the 737 max. The flight certification testing is scheduled to begin on monday. More than 15 months after the plane was grounded because are two fatal crashes. The faa says it has yet to make a decision on the 737 maxs potentialreturned return to service. Banning restrictions on passionate passionate passenger numbers. Continuing to is limit numbers, saying a return to previrus passenger levels is at least two years away. Singapore is preparing to reopen Tourist Attractions and Casino Resorts this week as the city emerges from the coronavirus restrictions. Most places will be held at 25 capacity with casinos limited to existing members and annual levy holders. Mr. Tour operators will have to introduce measures that reduce the risk of infection on their attractions. Headlines out of the philippines. Saying that he sees no need for a rate cut in the next quarter. He said it was a pm to move and that move was pretty much unanimous. Remain stablel over the policy. Price stability is least of their worries at this point in time according to them. They say the philippines can still cut policy rates if needed. Theying investors that have the capacity to do what is needed in the markets have been reacting to that. Sayingernor standing by, he is willing to use all tools if necessary. Taking a look at where we are, theave the peacock among biggest legs up. Down, down for the sixth day in eight. As we look at the other markets, here is how it is looking. Investors wearing about the rise in virus cases which they think will hamper the Global Economic recovery. The question remains you wonder about the second wave. Will this impact sentiment moving forward in the second half . Room we have a little more for risk assets to outperform . Session those right here, they have actually going a little more negative in the last hour or so. We have taken a look at Chinese Markets as well. They are down 277 points. Even Chinese Markets seem to be following this downtrend now. They were a little more resilient. That is despite the fact that we saw those industrial profit numbers actually rose. An increase for the First Time Since november. Your contending with this reality of a fresh resurgence of cases with any on the other side others n on the on the others. Give us a sense of what we can expect in the second half . Will we be seeing a correction from here . A really significant correction in the stock markets are not too likely. Two reasons. One is liquidity. There is not much debate about that. Even if we look at this more fundamentally with second wave fears, i think what is to be expected, if you open up, you would expect a couple of areas with cases. No country can afford anymore complete lockdowns. Even the richest countries cant. , somemay be some measures cities, some provinces but not this costly lockdown anymore. I think those factors are supported by the markets. Diverging from yields. Is there anything to be read into that . I think if you look at the recovery numbers, they are predictably going up. Not in a straight line. Especially if you have some stricter measures coming back. , it is toorecoveries much for them to recover. Yvonne what are you telling your clients . Is now the time to reduce overall risk another we are seeing a resurgence of cases . Some have said it has looked a little overextended. Is there a little more clarity . Are you starting to see risk assets . Some Asset Classes that are looking misplaced or mispriced . We dont think that. Assetthe exit classes. They dont look outrageously expensive. Granted i will have to wait but i think this is the way the market looks. We like the riskier credit. The u. S. Has already normalized it. That is certainly also an area that we like. Other than that, we are rotating. Ist we have recently done china has beaten the u. S. , one of the few markets where you have some money made your today. From our most preferred to a more neutral position. Notably both singapore and india. Leave it there. Thank you so much. Lets do a check of the Chinese Markets before they get to the lunch break. We saw a bit of a downside after coming back from that today holiday. The hang seng is down more than 1 . We got those numbers that i mentioned earlier, we are better than expected. We saw that first increase since november. We are following that downtrend, the pullback in asian equities. See a popup of cases in many places in the u. S. Japan has been a focus as well. Cases with saw some a daily record ever since japan lifted that state of emergency. We are still seeing some downside by half of 1 . We will have plenty more coming up. As we look ahead to the india open just moments away. This is bloomberg. You say that customers make their own rules. Lets talk data. Only Xfinity Mobile lets you switch up your wireless data whenever. I accept 5g everybodys talking about it. How do i get it . Everyone gets 5g with our new data options at no extra cost. Thats good. Next item corner offices for everyone. Just have to make more corners in this building. Chad . Your wireless your rules. Only with Xfinity Mobile. Now thats simple easy awesome. Switch and save up to 400 a year on your wireless bill. Plus get 200 off a new Samsung Galaxy s20 ultra. Pictures of the lion city a day before nomination day. It is at 11 30 a. M. In singapore. Negative territory here. Singapore will allow several Tourist Attractions including the two casinos here to start operations as of july 1. That is part of the resumption , this is at the second of a threephase opening. This is all leading up to a big day. The sti is down 9 10 of 1 . Lets get first word headlines with Karina Mitchell in new york. We start with pandemic numbers, global coronavirus cases have broken through 10 million with death surpassing 500,000. Authorities continuing to one against reopening too quickly. U. S. Infections are 2. 5 million with president Trumps Health chief saying that the window is rapidly closing. Theypence told cbs that are wellplaced. Reports from europe suggested the eu is to ban u. S. Travelers from entering. Denotes 15n countries that cant enter. Chinese travelers will only be allowed to enter the eu if european citizens are welcome on the mainland in return. Industrial profits rebounded for the First Time Since this november. Say going that the economy is finally recovering from the shutdown. Earlier. Ose 6 from bureau says that it is due to Cost Increases. Reports from japan say the abe ernment several sources close to diplomats in tokyo and washington are cited. Shinzo abe wants to maintain japans status as the so asian country in the group. President trump says he is considering inviting korea, india and australia. Vladimir putin is expected to easily win a constitutional vote that would leave him in power up to 16 more years despite weak economy, falling oil prices. There is little doubt that he will be given authority to seek two more terms as leader of the kremlin. 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. I am Karina Mitchell. This is bloomberg. Look at markets right now, it seems like we continue this downtrend here with the reopening from that lunch break. Once again extending those declines. Around 22,081ing for that benchmark. The topix is down 7. 1 . We have seen a cluster of cases in tokyo. That is raising dealer for many investors out there. We are seeing a percent decline. The philippines storming the laggard. Least, the surge that we have seen, we have seen some of these asian currencies a bit up. We have been watching where yields are. It has been a mixed bag when it comes to asian bond markets. We have seen the yields at the lowest in a couple of weeks amid this risk off session. This all mean for emerging markets . Assets could be posed to see some big gains with the fed yielding for control policy. Simon. Et more from here is how it looks on the headlines blog. You have a pretty positive forecast when it comes to asian currencies. That is despite the volatility we have seen over the past few days. How long do you think this negative move will last . And i thicket will simon i think for the nextlast few weeks or so. The policies are acting relatively belatedly. This negativee mood will last for a while. I think one interesting thing will be the release of the fed minutes on wednesday. We could have quite a significant discussion on yield curve control. Yvonne getting back to your main second have view, why do you expect strong returns in the end . Those aspects is yield curve control. I am thinking there is a decent chance that the fed introduces it on september 16 or at least you get a significant increase in expectations along those lines. What would be important about that is that it would significantly reduce tail risk in u. S. Yields. I think there is some evidence that that would be quite powerful for emerging markets. That would stem Forward Guidance in into brought thousand 12. Yvonne do you think that in 2012. Are yvonne do you think investors are ready for this . Of positioning, positioning is superlight. If you take the bond markets, if you compare the most recent 12 months with the fiveyear average, and equities, the difference is even more stark. You have three standard deviations short for equity inflows. Positioning is very light indeed. Yvonne are there any ems that will do relatively well . Simon i have started to look at those. In asia, that might be korea and india. Fx valuation is cheap. India is cheap. Of course, there is also yield. These are very cheap currencies, very high yield. The port inflows have been very light in those places. Currencies are up about 2 in the past two months. Still to come on the show, boeings grounded 737 max faces a critical test flight perhaps later today. It is another step toward the return. We will have details, next. This is bloomberg. Infectionsvirus continue to climb, bloomberg spoke with Johns Hopkins school of Public Health about the consequences of the search. We go from data that came from the rest of the world as well as here in the u. S. That the surgeon hospitalizations and in deaths from infection will occur somewhat later than the surge in case numbers. See some of the more serious implications of this surging cases in the next week or two. Public Health Interventions take about one or two weeks before they come into play. The longer we delay acting now, the longer we will see this surge of cases continue. What have we learned when we first found out about cases in the u. S. . Are we better able to deal with people that are able to deal with it . Are we dealing with things differently now than we were two months ago . I think the medical infrastructure has learned a lot about how to treat covid19 cases. I think we are better prepared to deal with those cases coming. We still run the risk of getting out of beds and spaces and the facilities to take care of patients unless we really keep down the number of total cases that have occurred. Are we aware of the level of clusters . If so, how easy is it to get a handle on those . Thing is that there seems to be more association with super spreader events. This is in contrast with Something Like influenza where we think it is something that is much more personperson spread. It seems to bes, that there are large number of cases from exposure. The more cases we see, the more likely it is we have these large bunches of cases that then increase the rate in which the virus is spreading exponentially. Work . domestics do masks work . Important thing to understand is all of these Public Health interventions that were put in place were meant to tamp down the number of cases. The virus is still here. What we need is to have other things in place besides things like lockdowns to try to dampen the number of cases. Masks are one thing, social distancing is another thing. The other thing that will be important here is understanding Contact Tracing and testing will be another very important tool to monitor the case numbers and keep them down. If we can identify the people who are sick and put them in isolation or quarantine, we could avoid doing that across the entire population like we had to do because of the surge of cases that happened in february and march. That was dr. Andrew pekosz. School ofhopkins Public Health is funded by bloomberg philanthropies. Lets look at the latest business flash headlines. Microsoft considering a secondary listing in hong kong that could happen this year. The blackstone back Chinese Company listed on the nasdaq in 2011 and it is worth about 2. 7 billion. It won 200 million in backing from blackstone. Rolling out a Live Streaming service similar to amazons twitch. It has been testing a mobile streaming network to a u. S. Affiliate since at least march which was initially called mad cat. It has the old portfolio of games such as fortnite and titles such as grand theft auto and destiny 2. Chesapeake energy has become one of the industrys most visible price crash victims, filing for bankruptcy as the coronavirus demonstrates parts of the economy. It is entering a deal to limit 7 billion in debt. Chesapeake is seen as vulnerable to the shale explosion that has contributed to the Global Energy glut. A risk out there for most of asia. Lets check on where Indian Markets are as we open. It is down currently. Much. Fty is lower by as we had indian stocks rising on friday. The benchmark posting its third week in gain. There have been expectations of those virus cases that could hamper Global Economic growth. Take a look at where we are in terms of those access bank stocks. They fell 2. 5 in three open markets after the s p cut its rating. Down 2. 3 . Ess there is a looming recession in india. Been a huge problem for indian banks. We also have housing and urban Development Companies surging by almost witty percent right now. 33. 40. The Fourth Quarter profit rose and came in better than expected. Down 2. 8 right now. Lets get the facebook as it is under growing pressure as more Companies Pledge to add spending to cut down on hate speech. They are hitting the pause button on spending. Su keenan has more on this. We saw facebook shares take a big hit on friday. Facebook was down more than 8 . Many analysts say that they can expect to be under more pressure. This as a slew of Companies Say they will hit the pause button on advertising. It is not outright boycott facebook. Some saying they would suspend suspending suspend spending on facebook. Relateds, many consumer companies. It is all part of a growing campaign to pressure facebook to thatess mobile posted put forth hate speech. Tok zuckerberg was Quick Respond to growing criticism on friday. Lets listen. I am committed to making sure that facebook remains a place to use their voice to discuss important issues. I really believe that we make more progress together when we can hear each others perspectives. I also stand against hate or suppresses voting. We are committed to moving that content removing that content no matter where it comes from. The ceo was quick to point out that there are many key changes they have made and have been working on in advance of the election. They will provide authoritative info on voting and stop the fight or suppress boaters or mislead them. They are also creating Higher Standards for hateful content. That is the crux of the criticism of facebook right now as well as labeling newsworthy content. Zuckerberg said that facebook is a force for good but the growing pressure on the company indicates many believe they can do better. Leaves a very difficult decision position for mark zuckerberg. Su there is concern from a lot of analysts that youre seeing a stampede of advertisers. There is an estimate of 160 plus companies that agreed to either not by ads or to outright boycott facebook. Starbucks did not officially participate in the boycott but they say they are suspending ads while they discuss the matter internally. If you look at the stock chart for facebook, analysts cautioned that if you see the noise continued to grow on this, there is a concern the advertising access could spiral out of control. That would put trump on the bottom line. Put them on the bottom line. The stock took a 56 billion dollar hit. Mark zuckerberg took a hit to his net worth and there is now talk of pressuring companies in europe to join in on and withhold spending on facebook as a way to pressure greater action from a company that is so far saying they are doing what they can. Back to you. Yvonne that was su keenan with the latest on facebook. We have more coming up, keep it here, this is bloomberg. A Senior Advisor to hong kongs chief executive says any u. S. Sanctions over beijings move to impose a security lock on the city would be a lose lose situation. The law will warn people not to cross certain redlines and will not threaten the principle of one country, two systems. When i say we dont know the exact details but we know the framework, the bill is to National Security, specifically in four areas. Subverting the state power successions and the terrorism act and foreign interference. These are very specific areas that the bill targeted. I think we basically know what it is. It is still down to the actual interpretation and enforcement. That needs to be a determinate. Even without the details in hong secretary reassures us that the law will be enforced in hong kong. Law, common law jurisdiction. It is quite clear that even though the law has been legislated in the mainland, the enforcement and the adjudication will be in hong kong. I have great comfort knowing that the Mainland Authority is already sticking to the one country, two system when they draft this bill. Otherwise they could enforce the mainland National Security lock to hong kong. They did not. There are very different jurisdictions. They would want to make sure laws can be applied and work in hong kong. Yvonne in the past, you said you expect that this law would have a deterrent effect. That it would not be used as much but right now youre saying that it is really needed in hong kong. How much do you expect this law, once implemented to be put into question mark bernard put into use . Told that they dont have a retrospective effect. Tois to tell people not cross that redline. You cannot ask for hong kong independence and we dont tolerate terrorist acts. Ifpeople abide the people abide by the law, i dont expect we have to use this legislation. But may i remind you that macau passed National Security law in 2009. So far, from what i was told, not one case has been prosecuted under that legislation. If we dont cross those redlines, we have no use for this legislation. Succession, subversion, these are broadly defined acts of criminality that could be imposed. Is that entirely necessary . I cannot confirm nor deny. I have not seen the details of the bill. Security, inational believe that sentence is very sharp very harsh in those jurisdictions. I have not seen the hong kong version yet. I have yet to find out. That is my question to you. Are you worried about these countries putting in sanctions that could hinder business relations with hong kong . Is the National Security law, the protests and all the negatives that come with it, is it really worth it given hong kongs future . Rightly put it, we are one of the top three Financial Hubs in the world. There is a ton of interest in hong kong. If the u. S. Decides to put ascension on hong kong, they could but i dont see how how that is in their interests . They could end up hurting their own interest as much as our own interest. That was a top advisor to the chief executive, carrie lam. Taking a look at markets right now, it is a down day on this monday morning as we kick off a new trading week. Point 3 . N about one u. S. Futures as well have now reversed to the game that we saw earlier. About. 1 . In manila, we have seen more than 2 losses. We did hear from Central Bank Governors saying that they see no need for a rate cut the next couple of quarters after that 50 basis point cut they had last week. We are seeing a bit of dollar weakness right now. Down about a 10th of 1 . The yen starting weaker, point. 1 stronger. U. S. Is keeping the you on pretty steady. It is also blunting dollar strength. At 68. 70. 687. Keep it right here with us, 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