Infectious disease expert Anthony Fauci says the u. S. Could risk 100,000 coronavirus cases per day if this behavior doesnt change. In england and wales, the deaths fall to their lowest in 12 weeks. Slow start stocks dip in asia after indexes in the u. S. Post their best quarter in more than two decades. Manufacturing pmis today in europe, a sign of confidence in the recovery to come or not. Airbus begins the biggest risk structuring and its history. With theut 15,000 jobs majority impacting the main bases of germany and france. Just our under an hour away from the start of cash equity trading in europe and u. K. Lets take a look at futures right now. We finished down on most of the european indexes yesterday. The dax closed higher yesterday. We are still looking at futures lower for the euro stoxx 50, the futures, and the dax across any european contract. Quarter toout one 4 10 of 1 . Take a look at futures in the u. S. After 1. 5 gain on the s p 500 yesterday. Futures are now pointing lower, 0. 5 there. Nasdaq futures down about one third. Moment. Just under the 1800 mark. It did take out that level yesterday. Thats of interest. We will keep an eye on whats going on with Package Delivery companies as well. Lets get a bloomberg first word news update for you. Some of the top stories we are covering here at bloomberg. The u. S. Is going in the wrong direction when it comes to the coronavirus. Thats the warning of Anthony Fauci. He says daily case counts could more than double to 100,000 behaviors dont change. He added, we are not in total control right now. He declined to estimate the number of potential virus deaths but said the total would be very disturbing. Chinas security lover hong kong published last night. Extends to actions committed by anyone, hong kong resident or not. It appears to cover nonviolent tactics like those employed by protesters. Weve seen the first arrest made under that law overnight. Boris johnson unveiled his plan for the u. K. To build its way back to prosperity. The package ran into immediate criticism. It offers no new money and falls short of the new deal the government had touted the night before. A chancellor will set out more details of the Recovery Plan on july 8. 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. Matt asian stocks start the new quarter in a muted fashion with european and u. S. Futures drifting. Investors assembled mixed data on the global economy, concern over the coronavirus. Weve got that arrest that you mentioned. Lets get to the markets now with simon flynn. First off, on the hong kong arrested for was flying a flag in the middle of the park. Is that going to affect risk assets at all today . I wish it would. I dont think it will. Obviously, the new set of laws seems to be jacobian. They are willing to use them readily. To be honest, the market doesnt if thisare particularly doesnt seem to be spilling over into broader u. S. Relations. Most particularly the phase one trade deal. While that remains intact. I dont the the markets will react. Anna we are bringing live pictures of carrie lam, we will try to get those to you if they are not up are ready. We will keep an eye on those. Let me ask you about other matters. Will assets react more to data in the coming half year . Whats the assessment of the markets live team . Yeah. I think it will. You could argue is already started. U. S. Consumer confidence had a decent beat versus expectations and got a reaction from the market. Today, the chinese pmi was better than expected. That was quite encouraging. I think people will start looking at new types of data, infection rates, hospital capacity, mobility data. This is going to become more and more prominent in the second half. That kind of information gives us leading insight into the hard data. Terms of what risk assets are going to react to in the third quarter, what do you think it will look like . There was so much of the Second Quarter rally, just a play on a rebound that was expected. It wasnt shown in the economic data. Are we going to see markets react more specifically to the numbers that come out this quarter . Yeah. Definitely. I would add policy into that mix as well. Think Federal Reserve in particular is going to be relatively proactive. The piece i wrote today about the possibility of the introduction of yield curve control, theres also a wide range of discussion at the fed about introducing average inflation target. These sorts of things will strongly reinforce their commitment to bring about global recovery. Obviously in keeping yields very low and stable, thats also extremely helpful for risky assets. Anna thanks for your time. That is simon flint with his latest thoughts. Up next, credit markets, critic issuance. June becoming the third month in tops 200 issuance billion. The outlook for corporate debt, coming up next. As carrie lam speaks in hong kong, keep you updated with everything the chief executive has to say, live from the city. This is bloomberg. Anna 45 minutes to go until the start of the European Equity trading day. Theres point modestly to downside, 3 10 of 1 . A similar move in u. S. Futures. Lets get to the european credit story. The euro credit market is booming, issuance topping 200 billion euros. As the fed props up Investment Grade credit in the u. S. , the default risks in the highyield space seem to be rising with Companies Filing for bankruptcy. Lets have a global conversation about credit markets and bring headrporate ratings global Richard Hunter who joins us now from fitch. Good to speak with you. Let me ask you about europe and the outlook for defaults. Everybodys wondering, when support packages come to an end or start to be less generous, whether we will see this rising rate of defaults in europe. Do you expect default rates on the rise from here . Richard yes. Theres too a limits to that. We expect the default rate the matt d you expect that to be reflected in your second half ratings actions . You completed 600 ratings actions so far since the virus since the pandemic has become something that the market is focused on. How many fallen angels do you expect to evaluate in h2 . Companies going from Investment Grade credit that you then move down to junk rating. Richard yes. Its been about 150 billion so far. Thats only about 25 companies, interestingly. We dont think Investment Grade will come where the action will be in h2. Of thebecause the bulk most obvious candidates and affected sectors have already been reviewed. We could see another 100 million moving. A confluence to be of events. If you look down at the other end of the scale, weve got 95 freshly minted triple c category ratings. Those are the ones you are looking at to see that default rate pushed up. Anna does europe look very different to the United States when it comes to the path ahead . Is it different is it similar . Richard it is similar and different. That similar in the sense the same factors are affecting both marketplaces. We might see a diversion and efficacy of the response to the crisis. Thats a caveat right up front. Generally speaking, the way weve been looking at this, the stressors we have been throwing at the sectors have been consistent across the u. S. And europe. Theres one interesting thing. The European Market does not contain a lot of those sectors that are most affected. They dont go to the bond markets. Things like leisure, transport. Europe are notin bond market participants. They are smaller, familyrun. They are dealt with in the bank market. They are invisible from a rating perspective. Very important for the economy. A worstcaseed scenario outlook. The fact that widespread disruption to civic life could threaten to a road the social contract. It seems we are seeing that in some pockets around the world. What do you mean by this . What are you concerned about, in terms of the social contract . Richard i should stress, that is from our downside case. Hugging closely to the baseline case. When we are talking about that, we are not talking about what one would consider as relatively traditional levels of protest. This is not the first time weve seen the levels of protest we have in hong kong or across the United States. We are talking about where that multiplies and you start to see a breakdown in law and order. You see regular situations with looting. Not a case of looting but looting out of necessity. That would be part of the severe downside case that we put out there, that we certainly help we dont see and is not embedded in the ratings. Anna thanks very much. Stay with us. Stay with us for another conversation. We will look at some of the sectors in particular that are seeing an impact. Coming up, the developments in hong kong. Hong kong police make their first arrest under the new National Security law. We will be live in the city shortly. This is bloomberg. Matt welcome back to the european open. We are 40 minutes away from cash equity training and the first day of the third quarter. Futures pointing slightly lower. Lets get the Bloomberg Business flash for you. These are todays top corporate stories from the bloomberg terminal. Airbus is planning to cut 15,000 jobs as part of its biggest restructuring in history. That will come from its main bases in germany and france. The company says output will be about 40 lower than expected for two years, due to a dramatic slump in demand. Nearing achs may be deal to resolve its biggest legal threat in a decade. The wall Street Lender is hoping to avoid a guilty plea for its role in the 1mdb scandal. Prosecutors allege it helped malaysia raise money, some of which ended up being diverted to 1mdb officials and their associates. The u. S. Federal communications zteission says huawei and our National Security threats. The move prohibits federal subsidies being used to buy their equipment. Both companies have close ties to the communist party and chinas military. The u. S. Has repeatedly argued its equipment can be used for spying, a claim that Chinese Companies deny. That is your Bloomberg Business flash. Richard hunter from Fitch Ratings is still with us. We were talking about the probability of defaults. 2021hink coming more in than 2020. The possibility of downgrades. Do you think there will not be so much action in Investment Grade credit . What about an industry near and dear to my heart, automotives . Its of who huge truck huge chunk of what you evaluate. It has been hit hard by the crisis. Richard yeah. If you look at that on a global basis, its a very substantial chunk of the revenue base we look at. About half of all the manufacturing revenue if you take all the companies together. Of all the sectors where weve been, they are the median sector. We have been slightly more optimistic around autos. The course of the lockdown, we saw positive signs there. We lowered a couple of the comic ors. We lowered renault. Most of the carmakers have been affirmed with a change in outlook, simply because of a number of things. They already have substantial cash facilities on hand to write out trouble. They are used to dealing with cyclicality. The oil and gas industry is facing a her registry years. It is used to dealing with profound swings and demand. We would not say that they are not exposed. There are big challenges in the supply chain. With moret dealt exposed sectors. Anna in terms of the actions you have taken so far, i was looking globally in terms of your gown downgrades. A lot of it came from highyield. In particular, five sectors. You mentioned oil and gas. Has there been any surprises . There have been areas where you would look to during this crisis as aussie us obvious victims. Were there areas less prepared than you might have anticipated . Richard probably. Its more the flip side of that. There are some that have done well. Coming into this, we felt that everyone was going to take a hit. Weve seen slightly stronger performance from the Health Sector than we expected. I dont think theres anyone theres one, media. At the start of this, we felt that media would probably be resilient. Up until now, weve had 75 negative action rate on media. Thats because you are covering across entertainment, advertising. Over the course of the lockdown, we started drawing the conclusion that if you think about where the cost are going to come, food, beverage, tobacco, ok at the moment. When you look at advertising, the impact on other areas of media, media is a straight answer to your question. We thought, at the start of this, we were, about it. Now we see more negative actions on that. Matt 30 seconds left. Emprise 8. 6 trillion of revenue destruction over two years. A huge number. Think the bulk of it europe will be hit harder. Why europe . Richard they have one of the worst gdp performances, down 8 and our forecast. The eurozone, theres a slight optical thing. They hire a lot of the big oil and gas things. Those revenues are generated globally. Its a mixture of the weaker gdp out for the regional economy and the fact that its the headquarters of the big oil majors. Anna thanks so much for joining us. Good to speak to you. Come back and talk to us again. Great to get richers perspectives this morning. European equity markets, still a half hour to go. European futures point downward. 3 10 of 1 for euro stoxx. Geopolitical tensions focused on whats going on in hong kong right now. China asserts its rollover hong kong. Beijing passes it security law. The west is concerned about the citys economy. Were live from hong kong, next. Police make their first arrest under the new security law. This is bloomberg. The best tv experience just got better because now you can watch all your favorite hulu shows and movies on xfinity. Youre only a voice command away from Award Winning shows like the handmaids tale, to new hits like little fires everywhere. And fx originals you can only watch on hulu. Thats just the beginning of what you can experience with hulu on xfinity. Tv made simple, easy, awesome. Anna welcome back to Bloomberg Markets european open. European equity markets futures will be weaker at the start of trade by 0. 25 . Concern about the virus lingering. Virusl get back to the story later. Hong kong police have made the first arrest under the new security law. The city is marking 23 years of rule from china, with beijing imposing new laws that would give licenses to critics. Us. Ie kamaruddin joins what do we know about the arrest that has been made . Within 24 hours of the security bill being passed Hong Kong Police have made the first arrest. Saids bearing a flag that hong kong independence, and a black tshirt with the slogan free hong kong. There are plenty of protesters. Anthems are being sung. This more packed in shopping area since midday. Over a thousand people have congregated so far. Wearing the allblack attire we have associated with protesters. There is a heavy police presence. Sidewalks, and very much on high alert after the first arrest that was made. They are raising banners warning people against activities that could be in breach of the new law. A new bubble flag was raised a new purple flag was raised showing people could be prosecuted under this new rule. . Att what are the specifics do we know the specifics of the law, it was not clear at this time yesterday . 66 articles of the law, but there is still not clarity. There is an extraterritorial element. In hong kong and nonresidents could fall afoul of it along with those outside the territory should they be seen to commit offenses highlighted under the bill, mainly secession. Ctivities, terrorism bill, provision under the there was more information [indiscernible] it is unclear how this will be implemented. We are seeing the Police Take Action under the new rule. We can hear animated voices in the background of your shot. What are the implications for businesses . For those in hong kong or those who visit in the future, what are the implications . Messagethe underlying is to stay out of politics, that is the interpretation of some. Saying Research Firms criticizing government along those four offenses, they should of falling a of these rules. There is criticism of the government, a call for independence, that is where there could be gray area. Businesses such as barclays saying they are not willing to comment and this is a political matter ultimately. Matt Sophie Kamaruddin on the ground for us in hong kong. Stay safe. There is a lot of activity there. The pictures tell an amazing story, along with your excellent reporting. Hank you for that lets get to another issue, even when cruise ships are allowed to sail again, how do you make the experience as enjoyable as it once was for some people . That is one of the challenges facing Companies Like carnival. Its ceo told bloomberg how he is preparing for a return to the seas. Out, our entire been extremelyd busy these past many months. We are retraining crew in an environment that is difficult to do so. Repatriated over 70,000 crewmembers, and have over 10,000 still in ships at sea that we are trying to get home. It is unprecedented. We voluntarily paused. Since then the cdc has issued a no sail order. Going beyond that, our industry in the u. S. Has already extended our voluntary pause into september. Outside the u. S. , we are more optimistic. We think there is the possibility for some sailings to occur again in europe. Germany is engaged, italy is engaged, spain is engaged and are taking a look at resumption of cruises for their domestic travelers. That could occur possibly, but who knows . It is unprecedented. E have no revenue basically we still have to maintain our ships, and we have thousands of crew is see thousands of crew at sea. When we are able to resume, we resume. Ready to it has been absolutely devastating. I am sure the others will say the same thing. Our highest responsibility in top priority is always compliance, environmental protection, and the health, safety, and wellbeing of our guests, of the people and places we touch. 700 locations around the world on all seven continents. Those people, their health and wellbeing is the primary concern for us. As is our crew. With that in mind, we are totally focused as a company and as an industry in pursuing the best interests of Public Health as we do eventually resume cruises. What is the main source of labor for the crews . 90,000, crew of over precovid, we had representation from 145 countries. We repatriated over the world. We have some confrontations in the philippines, india, indonesia, central europe, caribbean and everywhere else. , airlines were shut down, then there were issues around who could travel. It has been a very tedious process to repatriate. The European Union is going to extend a ban on travelers from the United States for while openingeks, its doors to travelers from china and other countries. You look at that announcement . Not surprising. The virus itself moved east to east so it is natural the is perhaps recovering sooner, therefore europe is more comfortable at this point with the levels of the spread of the virus. And obviously here in the west, peak, u. S. , we are at a or continue to peak in some locations. It is not surprising. A couple of weeks is not a dramatic amount of time. We will see what happens over time. Ceo, that was the carnival arnold david. Up next, stay at home. The eu extends travel ban for the u. S. How much of an impact will have on europes grand reopening . We will discuss with the managing director of lastminute. Com. Matt welcome back to Bloomberg Markets european open. The open minutes from of cash equity trading. Futures a little mixed, cap futures unchanged but in the dream. Unchanged but in the dream. In the u. K. , Boris Johnson unveiled his plan for the country to build its way back to packagety, but the running to criticism. Opponents claim it offers no new money, and if it did, the numbers fall short of the roosevelt style new deal the government touted the night before. They will set out more details of the plan on july 8. Keeping the coronavirus under control is vital for economic recovery, that is the message of the Federal Reserve chair, jerome powell. He gave testimony to house lawmakers alongside the treasury secretary, steven mnuchin, who reiterated that the ministration wants to pass another round the fiscal stimulus by the end of july. Almost 90 of americans are dissatisfied with the state of the country, that is according to a new study from the pew research center. The unhappiness is hitting the perception of president trump. Behind joepoints biden. 50 of registered voters back biting. Back biden. 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 europes grand reopening for summer has one huge caveat, the absence of transatlantic businesses. The eu announced as travel reopens, most u. S. Citizens will be banned from visiting the continent. With tour operators unable to capitalize, it signals a long road to recovery for tourism. Lets get the thoughts of andrea bertoli, managing director partner, lastminute. Com. To speak to you today. The grand reopening for europe, do you see a grand reopening an appetite for booking holidays . What is the state of play at the moment . Surprised the recovery is so strong. Consider since last friday the u. K. Government the possibility for u. K. Citizens to go south in the summer break, on the beach in spain and italy and france. Double the reservations, we are trending 60 of thepe at volume before covid. What we touched back in may. Haveon as the consumer can theyinty about travel, really look to booking. Customers, and i hope the u. K. Government can give certainty by the end of the about being open for the summer for u. K. Customers. Matt how do you help customers figure that out . I am sure a lot of people want to get out of their house, out of their towns, maybe even their country, but have no idea where onget solid information ,here they are allowed to go what documents they need to bring, which precautions they have to take. Is this taking up a large amount of your time . Complexyes, it is very because it changes every day. Greeceek it looked like was open, then the greek government changed their mind and said midjuly. It is a changing landscape. This is probably one of the biggest problems at the moment in the industry. Clarity need to have about what is possible and what is not possible, because setting it is very complicated. Enought is complicated when youre talking about countries, but we are starting to see the phenomenon of local lockdowns in certain parts of europe and the u. K. Included. Having maximum flexibility is the only way you will give ,eople confidence to book because they have no way of knowing at the time of booking that when the time comes to travel they may be denied the ability to travel. What flexibility do you have do offer . Andrea you have to offer full flex ability to change the date of your travel. The trend you are seeing is more people are booking lastminute. Probably that is a good way to go. You book for next week or two weeks out when there is clarity and the possibility that something changes in a short time, otherwise for people planning ahead, they look for flexible fares. Fares for plane and hotel you can change the date, so you can cancel without incurring a penalty. What about where they are staying . I am on your website, i can choose a flight and a hotel, or a villa. Saying peoplerch are looking for alternative types to stay, like airbnb of accommodations. What are you seeing in terms of where people are booking rooms . We see a strong increase ,n certain accommodations especially villas or an accommodation or an accommodation when you can have family and friends. The hotels in europe are investing heavily on safety. Procedures are put in place by the Major Hotel Chains are really strong. Aning and contamination cleaning and decontamination is very strong at the moment. It, anotherfford big problem is not travel restriction but recession and the impact on disposable income for the consumer, but if you have the money and the time to travel, this summer is one of the best summers because beaches will not be overcrowded. 40 capacity, that means your beloved beach in spain will have 70 less people than a normal year, which is amazing. It is very concerning for the industry because the numbers are astonishing, but this is a great opportunity for people who can go on vacation this summer. Matt interesting stuff, thank you for joining us. Andrea bertoli, managing director partner, lastminute. Com. We are talking about the hardhit travel and leisure sector. For more on all things europe, join maria tadeo and myself on radio this morning for a special episode of the brussels edition. We will talk about germanys rotating presidency of the European Union for the next six months. Do not miss that conversation on Bloomberg Radio. I continue to try to convince our television viewers, convert our tv viewers to radio listeners. It is a fantastic way to get your news. It is easy to find. Go on the internet anywhere and in the Bloomberg Radio search box, and you will find us there. To bloombergsten dab digital radio, you have that luxury. Anywhere in the world, type Bloomberg Radio in the search box, and listen to us. Coming up, airbus embarks on the most expensive restructuring in its history, which means it is firing more people than ever. This is bloomberg. Anna welcome back to Bloomberg Markets european open. Of minutes until the start European Equity trade, futures are looking more buoyant. Embarking on the most extensive restructuring in its history, with plans to cut 15,000 jobs worldwide. Weeks after a 15 billion euro package to save airbus, save the French Aerospace industry. Clearly, that was not enough because of the travel restrictions. People are afraid to travel because of covid. 15,000 jobs, a letter percent of the workforce of these cuts will be made. This level should remain 40 below precovid for the next two years. Unprecedenteds and worse for travel than after the 9 11 attacks. , a thread is a theme that spreads across our reporting. We talk about the travel and leisure sector, the impact on the credit ratings, and now the firings that are happening at airbus. Coming up, the market open. Futures are mixed. This is bloomberg. Anna a minute to go until the start of cash equities trading. Lets get to your headlines. Going in the wrong directions, dr. Anthony fauci says the u. S. Good risk 100,000 coronavirus cases a day if behaviors do not change. In england and wales, deaths are at their lowest in 12 weeks. Airbus begins the biggest restructuring in its history. It will cut 15,000 jobs with the majority impacting the main bases in germany and france. Whyfirst arrest lessons four hours after beijing enacted sweeping security legislation. Hong kong makes its first detention under the new law. Looking at futures right now that are mixed. Euro stoxx 50 futures, ftse futures down, but not a lot of movement on futures. Traders are telling bloomberg that trading on the your ex for someis down contracts. There seems to be what looks like a Technical Glitch in terms of that trade this morning. Lets look at the live equity trade as the cache index is open. You can see our global macro mover screen. On the left side column, you see each index pop up as a begins to trade. The ftse gaining 0. 2 . The netherlands gaining also 0. 2 . Euro stoxx 50 up 0. 25 . The cac up a little less than 0. 1 . Youa lot of movement, but are seeing up arrows, plus signs in front of these numbers, even though the boxes are gray because as they hover around unchanged, we do not make them green or red, not until there is any size will the screen color them green or red. Or if it is an amazing move, three standard deviations away, you get a black box, which we do not see. Not a lot of volatility today. European markets opening came despite markets opening tame, despite an incredible quarter last year from asia to the u. S. Our next guest says the path to recovery is likely to drag now that covid19 process. Joining us is curt custard, cio exec. Director, Newton Investment management. Thank you for coming on the program. The Second Quarter was amazing. It does not matter if you did not get in at the right time, but even to date, the s p 500 is only down about 4 , doing better than european indexes yeartodate. The ftse is still down 18 . What do we have to look forward with q3 coming up . Curt i think what you have seen to date is an understandable dirend from what was a situation earlier in the year. It seems like an maternity ago, but february when this kid off kicked off, was not long ago, and you have seen dramatic price action. The pace of the recovery will start to slow. You have had outbreaks across the United States which are resurgent. You have to keep up with the 24hour news cycle to figure out which lockdown is taking place where. I expect that to persist. Then the simple problem of math, when you have a low base of numbers like we did in february with the retail sales and the unemployment rates, any improvement on that base makes for an attractive comparison going forward. To see the ahead, level of the economic recovery, i am focused on what happens when Government Supports start to wind down, and companies return to normality with their workflow, and that will be the trigger for the pace of Economic Growth going forward. I wonder what that means for Investment Grade credit, because we have seen that being supported particularly in the United States. Isyou think that support neverending . Do we ever return to a normal market in that regard . Is there a time horizon you look for for that . Curt that is a great question. The short answer is for the foreseeable future i expect support. The fed has done a terrific job supporting the market to date. It has interfered in those markets, it is actively buying the creditupport market. As we go forward, i think that support will continue to take place, and you will see powell and gang continue to support a broad range of Monetary Policy measures until we get through this. Whether we can return to normal is a great question. With qeer you persist and unorthodox policy, it gets baked into peoples psychology implicitore it becomes protection for a given spread level for markets to function. Longterm that is not very healthy. Matt what do you think can be done . Supporto much fiscal from most major countries, and certainly all the central banks. Do we need to see more in order to keep markets at the current level, or are you concerned there could be a pullback in that spiking of the punch bowl, so to speak . Curt when you talk about markets, it depends on what part of the world you are talking about. The u. S. Market is driven by three factors, a change in the discount rate, which i expect to remain low. I do not expect the fed to tighten Monetary Policy anytime soon. The market is clearly looking the covid crisis and making an assumption about a return to Economic Growth, which is the question or area of markh i put a question around. The United States is getting hit really hard. I do not see people transitioning to new jobs, and as Government Support starts to wear out, i would expect more market volatility in the United States. The third factor is probably tech, which has been a great strength of the u. S. Economy and one of the themes for a long time. I expect this to continue. It is priced aggressively, no doubt about it, but on a longterm trade what covid has done is accelerate has beenation that taking place gradually prior to this. Whether it is schooling, medicine, working from home, we have had an explosion of the transition to that environment. Tech yes, we talked about quite a lot. As we approach the u. S. Elections, through what lens should risk assets of view this . Abouthey be more nervous high taxes or further mishandling of the covid19 outbreak . Curt you could get a double where, a circumstance there is a double impact from the influenza virus and the existing covid situation, which will add more fragility to the medical system in the United States. As perceivedling now in the u. S. , not going as well as we would like, my guess is there is a chance for a change in administration. If that happens, there will be concern over Corporate Tax rates, which will be a negative. You could have a volatile fourthquarter. Matt we do have a chart which we will try to get up throughout the program at some point showing the lead being taken. Interesting in terms of the polls. Buts have gotten it wrong, we definitely want to them and report on them. Curt custard, cio exec. Director, Newton Investment management is going to stick with us. Coming up, road to recovery. We get pmi data out of europe, and we will be watching for any signs of moving forward or backward in these allimportant numbers. This is bloomberg. Anna welcome back to Bloomberg Markets european open. A fairly flat and mixed session here today. The German Market doing nicely, but the cac in paris is underperforming. Pmi numbers due shortly, we are expanding data from france, germany ended early for an indication of the recovery in europe. We will focus on the data when it hits. Curt custard, cio exec. Director, Newton Investment management is still with us. When you look at your Investment Strategy for europe, how much of a game changer is the Recovery Fund for europe in terms of your analysis . Curt it obviously supports what is a more encouraging situation. Job,e has done a decent though spotty in places addressing the virus, and being able to support the economy fiscally is critical. Ishink it is adding to what a growing positive story. Think abouto you the rotation in the cyclicals . It is so important. Terms ofoned tech in the u. S. Here in europe we have heavily weighted cyclical companies, and hugely important for the economy as well. Volkswagen has 400,000 employees here, a massive number. What do you think about the support that has been given, and as anuity and debt investment in those companies . Curt a little bit is a function of time horizon. Ita 12 to 18 month view, makes sense. You will see a rebound from depressed levels of Consumer Behavior. As the Consumer Behavior returns to normal around the world, you look for germany exports, that is all good. You are in an environment where industrials will see an uptick in terms of Government Support and the returned of the consumer. On a 10 year trade, that is a slightly different story. A lot of these older Economy Companies have to start to to bes their product mix able to be competitive. That is a 10 year deal. On a 12 to 18 month view, it is an interesting position to be in. Anna i want to tell our viewers, we got a note earlier saying technical difficulties on the system that has to do with bondfutures, bunds, products around europe, and also equity futures as well. Across that and will bring you updates when we get it. Another sector you like, renewables. Where specifically do you want to focus here . It is a sector that gets mentioned a lot. Discerningave to be in terms of what you were looking at. There is a lot of the story that has legs. There will be a point where you look at windfarms and the pace they are growing, the efficiency they are able to produce energy. That is growing by leaps and bounds, that is an interesting play for us on a mediumterm basis. Avoid, it will probably be a cyclical rebound because industrials are doing well. I think oil, you may see a pop over the next six months, i think the down trade is likely to persist. Ofo not see a resumption massive expenditure in the carbonbased energies for the near future. Solar. Steer clear of the interesting part is how much it is growing and how quickly. It has become enmeshed in record time into the fabric of our Consumer Behavior. You think about electric scooters and electric cars, everything is a hybrid. That will boost the power for renewables around the world. Winnerou think efg is a esg is a winner . Curt yes, and it has less to do an environmentalist, and entirely to do with market forces. Technology has made renewables relatively cheaper compared to traditional sources of energy. The technology will win day, and you will see the shift take place. People do not realize much where that shift is taking place the most quickly is the worlds secondlargest economy, china, where people on the ground and the government want to pivot away from carbonbased fuels to renewables. Thank you very much for joining us. Curt custard, cio exec. Director, Newton Investment management. We will continue the conversation with curt on radio at 9 00 a. M. U. K. Time. Warns of, barclays ceo a stormy gathering over the u. K. Economy. Our exclusive conversation, next. Anna welcome back to Bloomberg Markets european open. All moving innot the same direction. The dax leads the way. Other markets looking weaker. A lot of focus on hong kong, we are showing you live pictures of protest activity taking place. Fora announcing retaliation u. S. Curbs on state media. China says some in the media space in the United States must declare their staff and finances , and urges the u. S. To change course on the curve of the media , Chinese Media in the u. S. This comes as broader tensions u. S. And china particularly over hong kong and the position of the new security law, under which we have seen a number of arrests take place overnight, even though it has just been introduced. Other breaking news in europe. Matt 30 arrests in the causeway in hong kong. Roundup. E are doing a in terms of germany, a lot going on here. The was telling you about system outage, that is a Trading Floor issue that we are watching in markets today. The Deputy Foreign minister commenting on u. S. Sanctions on. On nord stream. Aner countries calling it intrusion on sovereignty, that is what we are hearing out of germany were the foreign minister says the new u. S. Pipeline sanctions are absurd and unacceptable, also saying these u. S. Sanctions on germany or pushing this nord stream russian gas line project or a grave intrusion of eu sovereignty. This has been an issue for a long time and it is taking up again the midst new sanctions that is making it harder for the germans to build this pipeline with the russians. The concern is that germany will buy more and more of this product from russia, and that is a concern of the time when putin is doing things like annexing croatia, crimea, etc. Reassesses is travel ban, residents here in to hiton are gearing up the road. Alternative data shows europeans are gearing up for the next forday, a glimmer of hope the struggling travel industry. Joining us to walk through the data is dani burger. Looks atr core isi alternative data, downloads of travel. This data is interesting because we see hedge funds use this to look at highfrequency data to get an adage on what the frequency data tells us. The thesis here is europeans have a cultural affinity for theirnd there would recovery would be quicker than the rest of the world. App downloads recover quicker than anyone else. Anywhere else. Wan asstarted to coronavirus cases start to spike. One of the interesting tidbits within this data, is the fact a lot of downloads are coming from alternative apps, like airbnb where you are not staying at a chain hotel. There are people looking for this recovery to support the bigger industry wellknown names. This is travel from one country to another, but what about traveling within countries . Taking public transport and using trains . Dani that is certainly picking up. It is easier to travel within the country now. Going to your workplace is another thing, mostly by Public Transportation. We have seen those figures come up. Places likeat athens, they are seeing the greatest improvements, closest to back to normal in terms of transportation use. London is still struggling to get back to normal. Still more than 60 away from where they were before the coronavirus outbreak. This may be because of the workforce that can more easily telework, but it has a long way to go to get back to normal. Visitors are more likely to use transportation in greece. An odd fact iay have heard from a number of inferent people is that general i find people do not want to use Public Transportation when traveling to work. , often haveeekends no problem taking Public Transportation around for leisure activities. It is really interesting, and one of those quirky things. Someone from our opinion team and in great piece why what situations people will not adhere to lockdowns. Go is the command to type on your bloomberg terminal. Lets get some of your top stock movers in todays session. I will remind you some stocks are not moving. Available at not the moment. For those of you who know what as if the maze, it is not working. In terms of movers, airbus is not one of them. It is almost completely unchanged even as it announces of allgest restructuring time, getting rid of 15,000. R is a mover. P is up 2 up next, build, build in the u. K. As Boris Johnson seeks to look past the coronavirus. Anna welcome back to Bloomberg Markets european open. 30 minutes into a trading day that is more positive now. The cac down 0. 1 . We see the ftse and the dax slightly positive. Lets have a look at the sectors and where they are. We have an even split between the sectors. To the upside, oil, gas, basic resources. Oil and gas stocks up 1. 3 . Brent and nymex prices are both up by more than 2. 5 . We see that read across into energy equities. To the downside is a fairly defensive basket of telecoms, food and beverage, and utilities. Lets get a bloomberg first word news update. The u. S. Is it going in the wrong direction when it comes to the coronavirus. That is the warning of Infectious Disease expert fauci. He says daily case counts could more than doubled to more than 100,000 if behaviors dont change. We are not in total control right now. He declined to estimate a number but saidial deaths the total would be very disturbing. Hong kong police have made their first arrest after the new security law that curtails dissent in the city. It comes less than 24 hours after chinese lawmakers handed it down. The man was arrested for holding a hong kong independence flag. Critics say the law will seriously undermine hong kongs autonomy. Keeping the coronavirus under control is vital for economic recovery, according to jerome powell, who gave testimony to house lawmakers, alongside stephen mnuchin, who reiterated the administration wants to pass another round of fiscal stimulus by the end of july. Global news 24 hours a day, onair and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. Here in the u. K. , Boris Johnson has set out his vision for dragging the british economy out of what may be its deepest recession in 300 years with a program to spend billions of pounds on infrastructure to build back to prosperity. Will he be able to rally his party around policies that may break with traditional conservatives . What does business make of the proposals . Joining us now, adam marshall, british chambers of commerce director general. Good to speak to you. We have your survey out about the sentiment of businesses. I wanted to start with your reaction. There was not much mention of it being like a new deal for the u. K. Economy. Certainly, the press coverage ahead of the speech suggested we might get those references. May be the size of it pales in contrast to the new deal in the u. S. Was it big enough . 5 billion pounds worth of investment, what was your response . Adam for business communities, it is certainly an important start getting infrastructure start. Getting Infrastructure Projects around the u. K. Is one of the best things we can do to rebuild confidence and provide jobs at a time when a law of private Companies May be shedding them. It is not enough. Given the scale of the challenges facing the u. S. U. K. Economy, more substantial action will be required in the days ahead to boost business and consumer confidence. We have to see this as a series of measures. Infrastructure yesterday. We are going to need to see support for employment and much more in the weeks that. Matt so not enough. Clearly, adam, the 5 billion even in 1930s numbers to the actual new deal in comparison. What would you like to see, though . What would be if you had a wish list, what would be up at the top . Adam of course, we do have a wish list. Build on what business communities across the u. K. Have been saying to us and build on on incredible wealth of data and information about Business Performance and business expectations. One of the things we are going to need to see is a cut to some of the input costs facing businesses. So employment related taxes, business rates, and other costs. Companies should be focused on paying their people and suppliers right now, not paying the tax man. That will help them and the wider economy to recover. We are also going to need to see some form of demand stimulus as well. Consumers are not getting out there as quickly or as heartily as needs to happen for the economy to recover strongly, so it may take the form of a cut to vat, some form of a voucher. That demand stimulus is going to be important, too. Finally, we have a huge number of young people who we worry could be the most affected by this crisis. Their life chances and their employment chances. So we are going to see need to see some wage subsidies to get young people into the labor market and to give employers the confidence to take them on. A lot of measures are going to be needed in order to cure what is currently ailing the u. K. Economy. Anna we will see whether the chancellor, richie soon act, has been listening to any of those suggestions. A lot of suggestions about what needs to be done for the u. K. Economy. You also put out your Quarterly Economic survey. I was reading it and it was sort of a list of item after item. What surprised you . Lets start with that. What surprised you about this Quarterly Survey . Adam unfortunately, not very much surprised us given what we had been hearing from the ground level across the u. K. In recent weeks. Over the 14 indicators we have been tracking for the last 30 years, 11 of them are now at their historic lows and the other three are not far off. So it is probably one of the worst quarters in memory for british business. With aall knew that significant chunk of the economy being closed. What i am most concerned about is that the forwardlooking indicators, so questions about whether businesses have recruitment intentions going forward, what their confidence and turnover is likely to be and what their forward orders look like, all those indicators are pretty dismal were pretty dismal. That is why we think the stimulus is going to be needed to get things moving again. It is not a surprise to see the historic and backward looking data pretty dire, but it is a concern that when looking ahead, businesses are lacking in confidence and they need that restored. Matt in that case, i wonder how feasible it is for there to be apprenticeships and work the young for all people in the u. K. , something Boris Johnson is promising. It does not sound like there are enough openings. Adam well, it is only feasible if the businesses feel confident to take people on an train them. A wage why we said subsidy for apprenticeships and Work Experience and things like that is going to be so important over the coming months. Because there will be a recovery in business conditions, whether towards the back end of this year or into 2021, there will be a rebound. Businesses will need to be out needing to increase capacity, well. Ke on new staff as. We want them to have the confidence to do that and also the confidence to take on those who might be leaving school or leaving university and trying to get into the labor market. Otherwise, the government is going to find itself paying for that generation to be out of work or underemployed for a very long time to come, and that would be a far worse outcome. Matt thanks so much for joining us today. Adam marshall, british chambers of commerce director general talking to us about the suggestion of a new deal to build, build, build in the u. K. And what he wants, the bcc wants for biggest businesses. Enacts, as china sweeping powers to silence the dissidents, making its first arrest today, more than 30 people have been arrested amidst protest. The country is saying those arrests in hong kong will be handled according to the law. Pas law, of course, just out passed. The riksbank in sweden says it is prepared to cut below zero if that is deemed effective. It also is expanding its purchases to 500 billion Swedish Krona from 300 billion Swedish Krona. Riksbanksswedish Purchase Program is going to to 500nded byup to up billion Swedish Krona. This is bloomberg. Anna welcome back to Bloomberg Markets european open 42 minutes into a trading day that has European Equity markets a little more buoyant than anticipated. U. S. Futures flat to negative right now. Lets get a Bloomberg Business flash for you. Here are some of the top corporate stories. Fedex shares soared after earnings beat wall streets expectations. In health costs in check with a mix of job cuts and it held costs in check with a mix of job cuts and airbus is planning to cut 15,000 jobs, part of the biggest restructuring in its history. About 10,000 of that will come from its main bases in germany and france. The company says output will be about 40 lower than expected for two years. That is due to a dramatic slump in demand brought on by the pandemic. Sorry,chs says Goldman Sachs may be nearing a deal to resolve its biggest legal threat in a decade. The wall Street Lender is hoping to avoid a guilty plea for its role in the 1mdb scandal. Prosecutors allege Goldman Sachs helped asia malaysia raise money. The u. S. Federal communications zteission says huawei and are National Security threats. The fcc said both companies have close ties to the communist party and chinas military. The u. S. Has repeatedly argued huaweis equipment can be used for spying, a claim the company denies. That is your Bloomberg Business flash. Matt . Matt Hong Kong Police have made their first arrest under the security law. The city is today marking 23 years of overall rule from china , with the beijing cracking down on citizens protesting. 30 arrests reportedly made in the causeway. One man arrested in a park for holding a flag. Joining us live from hong kong is bloombergs sophie camerin. What do we know about the new security law that has been enacted, the specifics, and this arrest . Takensures have been within 24 hours of the bill being passed by chinese lawmakers in hong kong. The police force is out. We have seen trucks and riot Police Patrolling the streets. Searches have been conducted. We have seen some commotion where pepper spray was used, a water cannon was out in a neighborhood to the west of us. That was deployed as well. It looks like tactics are being used by the police to disperse crowds as best they can to prevent them from gathering, which could lead to heightened tension perhaps. As you can see around me, theres plenty of people around, largely peaceful for the most part, aside from those moments of tension. We have heard people chant protest slogans. Ry to hong kong beign sung earlier. There is still a lot of momentum for protest to be taking place here in the city. Anna what are the specifics of this law . For many months, we have talked about this without knowing very much of the detail, but now we have some of that detail. In the five weeks leading up to the approval of this new bill , there was a lot of speculation about what would actually be provided for, whether a Death Penalty would be imposed, whether it would be implemented retroactively. Neither of those measures have been taken. Keyfocus is on four offenses, that of terrorism, subversion of state power, dissension and collusion with foreign forces. The maximum penalty for the most serious offenders would be for life imprisonment. Again, no Death Penalty will be implemented. Whatside these provisions, also is causing some concern is the reach of the bill. It is extraterritorial. That means hong kong residents living in the city on those abroad could fall afoul of the new bill, along with non residents of hong kong. It is quite political, the nature of the bill, when it comes to trying to prevent criticism of the government. Matt you definitely, because of that, want to be very careful in hong kong, regardless of if you are a citizen or not. What are the implications for businesses on the ground and Businesses International that want to do internationally that want to do business with hong kong . Hong kong is still seen as a gateway to china. We have seen ipo, the pipeline there build up as well. Several companies have come out in support of the bill, namely hsbc. We have other big names, like barclays, saying they dont want to get involved with the politics. The underlying message to businesses is, if you want to be here, stay out of politics. Kamaruddine reporting for us live in hong kong among what appeared to be peaceful protests. When she was on earlier, we saw a lot of Police Activity and have seen Police Shooting some kind of weapons, what appeared to be maybe rubber bullets or some sort of teargas gun. We are going to continue to cover this for you after at least 30 arrests were made in the causeway area and one man arrested overnight for flying a flag in a park. Up next, big oil under pressure. With European Oil Companies suffering, americas biggest Oil Companies are coming under increasing pressure to disclose crude pricem assumptions that we have already ton bring massive breakdowns european oil producers. We will discuss that next. This is bloomberg. Anna welcome back to Bloomberg Markets european open. We have had french pmi numbers. French manufacturing pmi in june at 52. 3. It is a little above the estimate. We had italian numbers a few moments ago as well. Italian june manufacturing pmi below 50, 47. 5, so below 50 and slightly below the forecast. As we are reminded by mark cudmore, Big Questions over this type of index, this type of data point as to what it tells us. What is the link between this now, perching managers and their expectations, what is the link between that and growth . Americas biggest Oil Companies are under increasing pressure to disclose the crude price assumptions that underpin their business model. Pandemics the covid19 injects fresh uncertainty into demand for fossil fuels. Lets bring into the conversation a reporter for bloomberg green. Downmonth, bp had to write 17. 5 billion and yesterday, shall up to 22 billion. Good to speak to you shell to 22 billion. Why have we seen these writedowns from Oil Companies . Oil prices have fallen dramatically drastically. That causes these Oil Companies to rethink what longterm prices are going to be. These prices are what they use to value what is on their books already or to decide what new projects to financing go ahead with and what kind of returns they will bring to investors. With this outlook change, bp had to cut its longterm oil price 55. 70 per barrel down to had to do similar lowering of prices in the short term. That is what has led to the writedown that you mentioned, which are really large sums. Matt so we have seen these huge numbers for european oil majors. What does this mean for the u. S. Producers . So we know that European Oil Companies take Climate Change much more seriously. These writedowns are also reflective of not just a demand shock from the pandemic, but also a longterm impact on how companies are going towards fuel sources. European companies have been laggards in this case. In the story we are going to have on bloomberg green, it is that we have major u. S. Investors, so the new York Exchange common retirement fund, which manages about 210 billion, told us that without this longterm price assumption, cannot assess whether exxon or chevron are serious or just paying lip service to the threat of Climate Change. Matt all right, thanks very much for joining us. Talking about a story coming on bloomberg green dealing with oil majors, the drop in the value of the underlying commodity and and that means for earnings for the stock ultimately as well. We are getting pmis out across europe this morning. Withw spain, for example, a reading of 49, even though we were looking for 45. Here in germany, we are getting a reading of a 45. 2. 44. 6, so had been not quite as strong as we have seen in other countries. Pmis coming out all morning. Cross European Data screens in france, the reading was 52. 3 compared to 52. 1. We have gotten readings that have been better than estimates the germanbut reading just are not quite as strong as we have seen in france and spain. We also got unemployment change germany, jobs here in compared to 120,000. 6. 4 e survey, the rate was compared to the survey of 6. 5 . Anna the euro not really moving very far on some of this makes to data we are getting out of europe. European equity markets are on the move. They are actually fairly flat, flat to positive for the stoxx 600. The dax up around 0. 7 this month. Stay with the bloomberg television. Up next is surveillance. This is bloomberg. Francine authorities in hong kong make their first arrest less than 24 hours after beijing enacts a sweeping security law. We are live in the city is protest take place. Going in the wrong direction. Dr. Ctious disease expert Anthony Fauci says the u. S. Risks 100,000 coronavirus cases per day if behaviors dont change. Withs will cut 15,000 jobs the majority impacting the main base in germany and france. Good morning, everyone. Welcome to bloomberg surveillance