Slums, as concerns grow about washington may punish Hong Kongbased banks. The u. K. Chancellor unveils the governments plan to pull the economy out of its deepest slump in centuries. Boris johnson says the u. K. Is ready to leave the e. U. Without a trade deal. Manus the line from the vice chair, clarida is that there is more we can do, more Forward Guidance. Nehra. Orning, nejra good morning. If we look at markets, we were seeing some gains in asia, we china. E to see them in we saw some green on the screen for u. S. Futures after the index closed lower yesterday. Now those gains have been given up. Seeing in negative print for european futures, theyll. Interestingly, i made the riskoff sentiment in equities, the 10 year yield is higher. The dollar is absolutely steady. Gold getting a lift after the fed comments as well. Getting very close to 1800 an ounce, study in todays session. The u. S. Bids farewell to the world health organization. The white house has submitted a letter that starts the oneyear period. President trump has accused the w. H. O. Of being too deferential to china, as u. S. Virus infections rise to just shy of 3 million, causing doubts on efforts to restart the economy in certain states. Manus meanwhile, the fed remains in a whatever it takes mode. The vice chairman, Richard Clarida has said they will only add up to more Forward Guidance and asset purchases if it needs to plump up the economy further. Raphael bostic, the atlanta fed president , says it may threaten the pace of recovery. President hasand noted a leveling off in the activity in her district, and calls for more fiscal support. Is the head of investment from the International Business federation, hermes. Great have you with us this morning. Have we exhausted ourselves . Rhetoric like that from Richard Clarida would normally i e for the markets e momentum for the markets. What do you make of these comments . Is the fed signaling they are not done yet, they still have a couple of tricks up their sleeve, namely yield curve control. And there is still an upside risk that they will at some point, if rates drop below zero, look to purchase equities. That is an upside risk for equity markets, and for credit spreads, i guess. Nejra that is interesting, especially because in the last minute, it became evident that the fed wanted to lean much more into a detailed for guidance relevant yield curve control. Very substantial Forward Guidance without any further action be enough to lift risk assets and keep wheels suppressed . For i think at this point, the Forward Guidance will be sufficient to keep cities where they are. But if the fed is looking to further raise asset risk acid levels, i suspect may be something more will be required to really see dust risk asset raise risk asset levels, i suspect may be something more will be required. Been is still has quite a bit more to do to get individual spending, to get the economy really kicking again. Given the flare ups in the Southern States that, lets be honest, account for roughly 30 of the u. S. Economy, then it strikes me that there may be some more to do rather than ,imply some Forward Guidance positive Forward Guidance. Manus it is interesting that they call for the need of further extension of the fiscal. Oost we had how imperative is it for risk markets, equity markets, to be precise, that we get around to something that drives growth . Eoin it is fairly imperative, manus. Onest, in the absence of best Consumer Spending recovering fully, it is a most a necessity. I can envisage a situation in which we will have, perhaps toward the end of the summer if possible, o a further package of fiscal stimulus. We should accept them for years to come. Than depending on what happens with the election toward the end of the year, they may take on a more green hue at some point. Nejra do you expect Equity Investors to look through corporate earnings for the rest of the year, like they seem to have done so far . Eoin i do. I think it is more than likely that investors will continue to be very much focused on earnings in 2021, or their expectations for earnings in 2021, i should say. They seem to be rather happy at the moment to shrug off, if you like, any form of Forward Guidance from corporates themselves. So i cant really see why that behavior will particularly change at the moment. Equity marketshe are focused in earnings terms for now. Stays eoin murray with us, great to have you on the show with us today. Now lets get to the first word news. Civil rights advocates have criticized facebook after a meeting with top leaders. The group say the social network is not taking demands to come back hit speech seriously. Facebook said it wants its platform to be hitfree, but notes it will be judged its actions, not its words. Prime minister Boris Johnson is again warning the u. K. Is ready to leave the e. U. Without a trade deal if the bloc will not compromise. Negotiations are still stock over key questions, including how far britain will be able to lift regulations and still enjoy market access. President trump ins considering is considering running tiktok. No specific details on the potential done yet, but according to a childrens advocate, the app is basing a probe in the u. S. Over its Data Collection practices. Global news, 24 hours a day, on air and quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. Manus the chancellor sets out his stimulus plan to kickstart the british economy. , we discuss what he will be looking to do. This is bloomberg. S is bloomberg. Pm johnson next week, chancellor sunak will be setting out our immediate plan to support the economy through the first phase of a recovery. On fiscal matters, you will have to speakor rishi later on. Next week, you will be hearing more from him about what we will do to support workers. You will have to wait for rishi for the tax bracket. I think you should really read to see what the chancellor has to say really wait to see what the chancellor has to say. Nejra that was Prime Minister johnson telling the public to wait for rishi sunaks stimulus plan a little bit later today. No pressure, chancellor. And the wait is nearly over. United kingdom chancellor of the exchequer is set to unveil a bond recovery today. It will pay the wages of more than 200,000 Young Workers as he tries to pull the u. K. Economy out of the deepest recession and economic slump in centuries. Joining us to discuss the possibilities is dani burger. Unemployment is on the rise, that much is clear. Rishi sunak is likely to focus on bringing those jobs back. But the big risk here is that demand is not Strong Enough to see that furloughed staff brought back. You can see the worst thing, the productivity picture which may have a drag on those jobs. Output has reduced because the Furlough Program kept workers employed by hours worked has fallen, which means productivity isnt there. Recent reports have surfaced sunk is considering cutting vat to get Consumer Spending again. In thed savings rate u. K. , by far beats anything we sinceeen even the the last financial crisis. Over all, the impact of the virus on the public has been stock. Sunakstimated that efforts will go above the countrys gdp for the First Time Since the 1960s. A lot at stake, with more spending here. Nejra thank you so much, to Bloomberg Dani burger. Eoin murray is still with us. When you listen to what dani talked about, about the level of debt relative to gdp, and all the fiscal spending, does it make sense to you about 30 year yields in the u. K. Are approaching the levels of japan . Oin [laughs] it does make you think that we are somewhere in the middle of a era infor longer which yields could very well stay at a low rate for a very long time, and that we could be in this position for may be another decade or more despite the fact that the chancellor probably deeds to pile on fiscal theding, both in terms of , market support, and focusing on vat in particular. Manus when you hear the chief talking about, so far but it is a v, i find it so hard. Time. It is a tough a lot of employers will struggle to bring the people who are on furlough back. V . Do you trust that narrative for the bank of england . Eoin i wonder if maybe and is being a little generous with his alphabet there. Describe, orr to my expectations would be more along the lines of the jagged swoosh, or i believe the economists current favorite is what they call the reverse radical, reverse radical being your square root symbol but turned around the other way. In that sense, maybe we have done the heavy lifting in economic recovery terms, but the last part is going to be the really, really hard part. Interesting to hear you talk about what happens when up. Oughs are my sense when i talk to firms locally here in the southwest of england, a lot of them are for layingparing people off rather than bringing them back from furlough. So there is going to be an unemployment issue, more likely in the low end of the bracket. I should also use the word, what will the chancellor due to kickstart the economy . I believe kickstarters is the name given to their youth unemployment proposals, a pool of free labor in the economy. The bit that is missing for me in all of this is retraining. Lets be honest, this is a perfect opportunity for the u. K. To really pivot towards a greening of the economy, away from a dependency on fossil fuels. There are lots of things that can be done. I am hearing the chancellor maybe doesnt have quite the size of budget in mind that one might be looking for for that. Nejra interesting, when we heard the numbers on that yesterday, they were not necessarily as big as other parts of the world. You have brought up lots of interesting stuff, some of the details from the southwest of england, for example, which i am sure Global Investors will take note of. I also love the jagged swoosh in the reverse medical for the outlook for the u. K. Economy. As bad as things might be for the u. K. , if you are a Global Investor looking forward to advocate globally, comparatively to other parts of the world, like, the u. S. , continental europe, do you think the u. K. Will be much worse off postpandemic . Eoin i think the u. K. Is at a competitive disadvantage given other things that are going on right now, particularly the b word, brexit. Looking particularly in terms of equities, you could make a strong case that the u. K. Has had a very strong recovery. 40 s p higher, there is also the nasdaq recovery. Anday be Japanese Equities u. S. Equities that investors will find attractive. On the bond side, i suspect people will be a little bit defensive. There is an expectation we will see defaults continue to rise. Despite all of the support from the central bank. May be that will turn people away from the highyield junk end of the spectrum, and back towards investmentgrade. Eoin murray, aretional business mays, thank you for joining us this morning. We will have full coverage of the chancellors speech. Numbers we dig into the with the chief secretary at the treasury. Pandemics reshape societies, economies, and barclays has that will five trends accelerate due to covid19. , head ofharold patel sustainable and somatic investing Equity Research at barclays. This is bloomberg. This is bloomberg. Nejra this is bloomberg daybreak europe. I am nejra cehic in london, with manus cranny in dubai. The u. K. Chancellor rishi sunak will outline the governments plan to restart the economy. Retail sales figures from brazil to published at 1 p. M. London time. The data is expected to show a partial recovery from march and april. Manus yes, and at 1 15 p. M. , the chancellor merkel addresses the element in every in brussels. She will set out her countrys calls over the next six months. Later today, trump hosts his mexican counterpart, his first visit in the white house since taking office. Nejra pandemics reship societies and economies. Barclays has identified three five trends that may accelerate. Joining us is highroller patel, head of sustainable and thematic investment Equity Research at patel. S hiral your report is a thematic roadmap for 2030, and it covers 150 different industries. When you look at those through the covid lens, is covid going industriesye more than it decelerates through 2030 . Includes 150 trends, and when we apply the covid lends to those trends, we found that the majority of them were being accelerated by covid. By acceleration, i mean either an x11 did timeframe or a larger either an accelerated timeframe or larger market share opportunity. There were five key areas that were emerging. We believe that the provision of health care and education will need to change in the postcovid world. Beensectors have t quite hesitant to endorse digital disruption. We think regional supply chains and Industrial Automation will become more relevant, as review supply chains. We also think Public Safety in addition will become a key focus area, especially when you are. Hinking about manus economies reopening lets dig into those bigger themes. Best lets dig into those bigger themes. We will take more control and responsibility for our personal health. How will that translate in terms of how we engage in the companies that provide those facets for us . Hiral it is really interesting, because if you look at prior epidemics or pandemics, there has always been a slide to security from a consumer perspective. We think there will be a desire to regain control of personal health. From an investment perspective, we think this will lead to new products and services, especially related to Digital Fitness and wearable technology. What is interesting about covid is that the hygiene factor and the wellness economy will be popular, not just from a consumer perspective but also from a economy or industry perspective. What that means for companies is we think the emerging Business Models will gain scale. If there is a bigger desire for consumers to regain control of personal health, it might actually lead to the endorsement of health tech. Health tech is a word used loosely in the industry, but there are three things that spring to mind when we think about it. We think about the monitoring, the use of medical robots, and online pharmacies, for example. Nejra we have mentioned the word consumer quite a few times, and when we think about the Global Recovery in general, so often we come back to the consumer and whether demand will come back, whether we are talking about the oil industry, or the outlook for the u. S. Economy, for example. If as an investor you were to covid,the consumer post where else should you be looking other than the Healthcare Industry you just talked about in order to find those returns and that acceleration . Hiral great question. Another area we explored in the report was the future of education in the future of lifelong learning. Thehink if you combine modern consumer with a recessionary outlook, the desire to upscale, we could see that as a positive boost for the education industry. An investorans for is that the Deficient Technology is one of the thematic trends we believe is are missing. It is a large market friends we believe his promising. It is a large market opportunity. We call it edutainment, a combination of entertainment and education. Manus thank you very much, pretty big things to get our heads around. You talk about the sharing economy negatively impacting , and positively impacting trends around micromobility. Great report to get your hands on. Patel,patel cut hiral head of sustainable and thematic investment Equity Research at barclays. Madama lagarde is talking about the markets. The line from Christine Lagarde at the ecb, the ecbs actions have been effective. The ecb has the time to assess the situation. S up. Es on, tea appel. Up, frank what shape of her career is he seeing, and what is his guidance for the next best what shape of the economy is he seeing and what is his guidance for the next 30 months . This is bloomberg. His 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. Manus good morning. Your top stories today. The global rally pauses. White house makes good on its threat to leave the who. That Officials Say their scope for more action and economic reopening stalls. Hong kongs dollar peg is in the firing line. Talk trump advisors want to destabilize the peg in retaliation for chinas tightening grip on the city. A chase be slumps as concerns grow. Washington may punish Hong Kongbased banks. The governments plan to cool the economy out of the deepest slump in centuries. Boris johnson warns the u. K. Is ready to leave the eu without a deal. Nejra welcome to daybreak europe. We saw the global rally loosen steam yesterday in tech stocks. Chinese stocks continue their gains. The fed comes out with comments saying, we are the backstop. Manus why havent markets flown higher . Its the hong kong risk that is holding these markets back this morning. The possibility that the u. S. May take a salvo at the sovereign currency of hong kong. S p 500, stocks in europe. London is lighter on its feet. The s p futures turned negative. The backstop to end all backstops is there, ready to do more. Gold. My guest said 1800 is on the way by the end of the year. Thats a safe play on gold. Flatollar comes back to and unchanged. Ignoring seems to be the warnings that people are getting nervous. Business leaders are getting worried. Consumers are getting worried. Morning. Farewell to. S. Bid the world health organization. The white house submitted a later letter that starts the one year notice period. U. S. Fibers infections rise to 3 million. Remains in the whatever it takes month. The central bank would probably adopt more Forward Guidance and asset purchases if it needs to prop up the economy further. The atlantic fed president has warned against widening infections may threaten the pace of the overall recovery. Post has issued their guidance for 2020 to 2022. They expect to see fullyear at 3. 8s to come in billion euros. The risks are there from coronavirus. The ceo is frank appel, friend of daybreak europe. He joins us now. Good to have you as always. You talk about your three scenarios. And your guidance for profitability. Modee in a rapid recovery come in your estimate . Good morning. Frank good morning. Its too early to judge that. Its definitely possible that we will see a very strong recovery. We have seen already in the second quarter, starting a recovery. It very much depends on how well the world can contain the virus. At the moment, in europe it looks pretty good. In asia as well. , we started later. We are still more impacted. Signs thatsee clear we can potentially get a fast recovery this year. Thats not given. Thats the reason why we planned for different scenarios, even with the scenario that we get a very strong second wave and lockdowns. The guidance is based on these different scenarios. Nejra great to speak with you this morning. When i first saw the relief, i theres somyself, much uncertainty ahead. I understand youve outlined three different scenarios through to 2022. How useful will this guidance actually be to investors . Will you have to revise every quarter . None of us have ever been through such a pandemic. It is prudent to assume different scenarios. Tell the market, even in a worstcase scenario, we are confident that we can increase our performance year after year. 4. 7 would be still a record result for our company, going forward. I assume that investors will like that kind of disability. If we get a fast recovery, they can deliver more. Recovery, a modest they will still deliver a very good result. Even the worstcase scenario, the company will go through it. Thats thanks to our great workflows we have around the world. Thats the reason why we gave for everybodyes who works for a company. They have done an outstanding job in the last month. I trust that they will continue to help the world to get back on track. These people have worked relentlessly in this crisis. We have given them enough protection so that they stay healthy and safe. They have done an outstanding job. Improving numbers forward. Manus certainly to all those members of staff, a huge thanks for people like us. You talk about the express division. You talk about global forward. What i want to get a sense of his the pricing. We only to use your service. The world is in a state of dislocation. Are you able to charge more . Are you able to raise the premium in the express business . Are you able to raise the margins in the forwarding business . Talk to us through margins. The margins are extremely tight. Prices have gone through the roof. We have to transfer that to customers as well. Its an extreme late tight market. The market dictates the price level. We have asked for them. We have put all the relative small additional charges in for the extra cost. Usually transporting a lot of stuff in commercial airplanes which are not in play. We have to rent more airplanes. We charter customers. These are the market dynamics. We are doing what we have to do if the market is very tight and we have higher costs as well. Nejra i do want to ask about the cost in relation to ecommerce. Before that, you mention that you gave workers bonuses. They are very appreciative of all the hard work done by your employees at this time. Globally, there is Big Questions about what will happen to the labor market and unemployment rates. For where you sit now, do you 2022 having through a net positive effect on your hiring . Are you hiring more people . Do you see yourself actually getting rid of some of your workforce . Do you see it remaining stable . Frank its very difficult to predict. So far, we have commuted clearly for leadership around the world, try to keep as many people in the company as possible. There might be exceptions, if our customers are going in bankruptcy and we run warehouses for them. We cant protect these employees. We have no business left. We have transferred people from one division to another. People who were furloughed have worked so they get 100 payment. This is the First Priority for us all. If we assume that we are in a dark scenario and prove our performance, we might have a chance to have even more employment in our custommade company in 2022. Manus are you going to need more commercial space . Social distancing, additional signage, will you take on more commercial property, or less . Give us a sense of the cost of the business going forward. Frank there are different elements. Our travel expenses are significantly down at the moment. That compensates for extra cost for ppe, material. We have learned that we can work quite productive from home. Midterm, we have to look into how much office space we need. Logistics facilities will remain a hot subject in the real estate market. Said that we had a supply program this problem. That was never a supply problem. We have a demand crisis at the moment. We kept our supply chains open through the crisis. Logistics facilities will remain very important. Office space might be reduced going forward. We are looking into that. Cost cutting is not the priority. Whats important is the safety of your people, provide great service, and liquidity. We have done, from our development, we have done very well in collecting the cash for the services we are providing. We have provided great service. Ive never seen so many positive comments from our customers and consumers. They are thankful that they have delivered a stable performance through the crisis. Motivatedt keeps you through the difficult times. Can i come back to the issue of cost, in relation to ecommerce . Weve been talking about volumes increasing, which is not surprising during the pandemic. Consumers have been turning to ecommerce. Bloomberg intelligence talked about you facing higher costs associated with a shift towards more ecommerce shipments. Talk to me about the impact on the business, the future potential of an increase in ecommerce. Say i am positively surprised how well two of our [inaudible] we have found the right ways through technology. Recipients up front when they can expect so we have very high first attempt deliveries. That helps us. The mix and match on the airplane is beneficial. Business,r german pmp we have seen a significant decline in volume. Wepensated for the have found the right ways to mitigate the extra costs we have for parcels. Thats think to great process design and new technology we are using to inform people. Finally, are terrific workforce. Nejra thank you so much for joining us. Frank appel, we appreciate your time. Coming up, the future of film and entertainment as the u. K. Economy works its way out of the deepest recession in centuries. We see desperate to the ceo of the british film institute. Thats next. This is bloomberg. Nejra this is bloomberg daybreak europe. Chancellor sent out his plan to kickstart the british economy after more than three months of lockdown. The u. K. Plunged into its worst recession in 300 years. Focusing on jobs, the package includes a 2 billion Pound Program to pay the wages of more than 200,000 Young Workers. Its part of a plan to promote job skills and energy efficiency. He announced a 1. 5 billion pound bailout for the arts sector. Joining us now to discuss is ben roberts, bfi ceo. Great to have you with us on the show. Thank you for joining. The bfi is an institution well known to many londoners. You will be opening at the beginning of september. Talk to me about the arts bailout package announced by the government. How far will that go . Will it be able to prevent large amounts of layoffs in the industry, which relies on the work of freelancers . Ben good morning. This is hugely welcome news. Weve been working closely with togetheragues to put the case for supporting the arts and independent cinemas which provide a huge amount of jobs. The independent cinema sector employs 15,000 people. Culturales really key centers in many communities. Absolutely. This will ensure that many of them are able to open safely and swiftly. As a cinema, we are looking towards september opening. Many cinemas will be looking to open quickly on the same track. Its greatness. Everybody will look forward to that reopening. I look forward to being back there with you in september. The reality is, i went to the cinema recently. The reality is, it will be a lot harder for everybody to come back. There will be casualties. How much smaller will the church of cinema be . Ben you make a really good point. I will give you a simple example. With one meter social distancing in place, we can sell 160 seats. About one third. Its better than two meters but only one third of seats. Its difficult for independent cinemas to operate under a 50 capacity. What this package does is allow many cinemas like us to reopen actually below a level of audiences that makes it viable for them to open. This package is huge news on that front. My own view is the view of many of my friends and colleagues. We want to get back into communal spaces as soon as possible. I think there will still be casualties. Any arts package, no matter how big come is not going to be enough to support everyone. This has been worked out on the basis that we can get many of them back up and running. Say there will be casualties. How many insolvencies do you expect, as a percentage of the of they, as a result difficulty of operating below capacity . Ben im not sure. Its hard to say. We are still working out with the details of the funding are going to look like. Were working with government. I wont speculate on insolvencies. In terms of redundancies, many independent cinemas already had keepke a certain amount their carbon. Venuesre major cultural that announced they are closing their doors. Our job is to be the great administrator so that we make sure that we get that money out across the country. Thats one of the most important things, to make sure that our cinemas are available to audiences across the country. We will make sure it can go as far as it possibly can. There will undoubtedly be casualties. Using 5. 7ve been Million Pounds a day. Its a fact of life now that some of them are going to have to well with the you deployment and saving the heritage and social aspect for the people in the u. K. Thats the cfo of bfi. 4 30, we get analysis from barclays chief secretary to the treasury. Pathg up on the show, the to the recovery. Angela merkel heads to brussels today. She backs the 750 billion Euro Recovery Fund. We go live to brussels. This is bloomberg. To europe. The story is about Angela Merkel. Shes headed to brussels today. Its her first trip outside germany since the Coronavirus Crisis started. She will back the 750 billion Euro Recovery Fund ahead of a crucial meeting among the eu leaders next week. We have our intrepid reporter on the brussels trade. Maria tadeo is outside the eu parliament. Its raining in brussels today. What does she want. She wants a great deal. Good morning, maria. Maria she wants a great deal. Thats the reason shes here. It is symbolic that she is coming here today. This is the first trip since the coronavirus started back in march. When she speaks to the European Parliament today, shes going to repeat what weve heard for weeks now coming from Angela Merkel. The Recovery Fund is the best way to prop up the european economy. 500 billion euros in grants is the best way to protect the margaret. Whether you believe this is a big political gesture from Angela Merkel or just selfpreservation, germany is an economy that does depend on exports. Angela merkel is throwing her entire political weight behind this Recovery Fund. She said she wants an early dear deal. Onwill depend in many ways the Prime Minister of the netherlands. Content,ts about the not the time. Being tough on the european periphery is working for him. We are being told its not clear that there will be a deal next week. Nejra briefly, the commission signaled it is worried about a slow response to the crisis. What is the biggest concern . Maria thats a good point. They see a much deeper economic recession. 1 more than two months ago. They see huge differences between core countries like germany and the periphery which is headed to a 10 decline. They say this is more reason to get going on the fiscal front and get the recovery front approved quickly. The idea we could be headed into a twotiered recovery, countries that recover quickly, countries that do not. Tadeo, think you for joining us. Thats it for bloomberg daybreak europe. Futures point to lower open. This is bloomberg. Its pretty inspiring the way families redefined the word school this year. Its why, at xfinity, were committed to helping kids keep learning through the summer. And help College Students studying at home stay connected through our university program. Were providing affordable Internet Access to low income families through our internet essentials program. And this summer, xfinity is creating a Virtual Summer camp for kids at home all on xfinity x1. Were committed to helping all families stay connected. Learn more at xfinity. Com education. Anna good morning. Welcome to Bloomberg Markets european open. Im live from london. Matt the markets say, can you keep up . Chinese stocks continue to outperform as futures point to a second day of losses in europe and the u. S. Cash trade starts in just an hours time. Here are your top headlines from the bloomberg terminal. Hong