From the bloomberg terminal. Most improved player. President trump softens his criticism of Jerome Powell but the two disagree when it comes to negative rates. Traders price the fed going subzero early next yeek. Italy doubles down the government passes a much delayed 55 billion euro stem luis package but is it enough . Watch the b. P. Trade today. And america first. Or is it Americans First . Sanofi says the u. S. Will be first to get its Coronavirus Vaccine. It took the most risks in terms of investments. Well speak with germanys merck at 8 30 u. K. Too many. Were just an hour away from the start of cash trading in europe. Futures are pointing lower. 1 drops on the major equity indexes. Here you can see ftse futures a little bit worse than the continental indexes. Take a look also at the half percent or last drops that we see in u. S. Futures after big losses yesterday. U. S. Markets fell to a threeweek low and now were looking at a possible riskoff thursday as well. Anna . Actually you know what, ill peck it up here getting the first word stories for you from the bloomberg terminal starting with the pandemic. It will erase four years of Global Growth and may push 130 Million People into poverty in the next decade according to the united nations. The new study estimates the outbreak be l cut 8. 5 trillion dollars from the Global Economy nd sees lockdown increases leading to job losses. Italy has doubled down on its stimulus efforts approving a 55 billion euro package. The new spending includes emergency income measures, extra funding for companies as well as tax cuts. It was onlyly dubbed the april decree but it was pushed back after disagreements in rome. In the u. K. The government is getting a boost to its plans to ease lockdown restrkses. The u. K. Health authority has cleared and Antibody Test from roche. That can very people who previously they can identify people who previously had the virus. That is your global news 24 hours a day on air, a quick take on bloomberg, powered by more than 2700 joufrpblists and analysts. Anna, i will nows to it over to you. Anna absolutely. Apologies. I was a little distracted looking at some of the breaking news from a number of companies in finance and Housing Construction talking about not needing government support. Well talk about the Real Estate Industry later on. The companies that decide not to take any support from the government. Asian stocks, european and u. S. Futures are down after the Federal Reserve chair Jerome Powell warned about exick rescues and big name investors. Lets get to the markets now with laura cooper. Laura, good morning to you. Investors. Pooked it seem fazz the rally put in place the april is now this question. Is it the threat of negative Interest Rates . Warnings about evaluations. I guess it could be a mix of all of those things. I think it is a case of all of the above. When we saw the strong rally in prail that was predicated on in april that was largely predicated on the expectations the recovery would be swift. What were seeing from central bankers, notably from powell yesterday is dampening expectations that actually this is going to be a fairly long, muted recovery. There are a number of unknowns still ahead. Whether it is the prospects over the vaccine and the timing and pace over the lockdown and ultimately whether we see the surge in unemployment rates globally will going to come down quickly in support of a strong recovery that can then be priced into Sustainable Equity market performance. Matt what do you think about the powell speech yesterday . He did say that he doesnt think negative rates are a tool that the u. S. Is going to use for now. Does that mean maybe later since the markets certainly are pricing that in for next year. Certainly we are seeing the markets continue to price that in. Powell is very careful in terms of dampening the expectations. He did say back october all fomc members were against negative rates but again given these unprecedented times, he cautioned there is more stimulus likely needed and would like to keep the door open to a negative interest policy rate. It is quite questionable and needs to be studied a little more. You look at studies around the world. The signal point would be in terms of spurring Economic Activity. It is unlikely they are going to take that path but markets are still pinning their hopes that whatever it takes will be tested and the u. S. Will have to embark on that negative rate pro file. Profile. Anna maybe Oil Producers, commodity tracers pinning their hope on that kind of movement. How far will commodities rerebound . What a relief the oil prices are stabilized around 25 per barrel. That is not a price Oil Producers will like but it is better than negative. Absolutely. It has been quite challenged this year. We are seeing some signs of a recovery. Notably in the oil sector. That rally looks to have legs. For example, when they we are seeing that the production cuts are beginning to dampen just the world awash in splice. We are seeing americas stockpile it is fall for the First Time Since january and on the demand side, saudi arabia and russia have come out saying that they are seeing signs of a recovery in demands as these lockdowns are lifted. Crude is about 10 a barrel higher than it was from its april woes. F april lows. If demand becomes super charged when the lockdowns are lefted i would expect this garagal improvement in gradual improvement in oil prices can improve into 2021. Matt thanks very much for oining us. Laura cooper. Up next, most improved player. President trump eases the criticism of Jerome Powell but notes a major disagreement between the two still exists. Well discuss the negative rate story next. B. N. P. Paribas, chief economist is it really would it be a gift for the u. S. Or a curse . This is bloomberg. On negative rates really has not changed. This is not something that were looking at. The evidence on the effectiveness of negative rates is very mixed. It is an unsettled area, i would call it. I know there are fan turnovers policy but for now it is not something that were considering. I think we have a good tool kit and that is the one well be using. Matt fed chair Jerome Powell saying negative rates for the u. S. Not happening now even though of course the market is betting they will in 2021. Futures showing the market expects negative rates in spite of how those bets hold, President Trump weighed in softening his criticism when it came to Jerome Powell. Here is what he had to say. President trump ive been critical. But in many ways i call him my m. I. P. Most improved player. He is my m. I. P. For now. I think he has done a very good job. I disagree with him on one thing though. Negative rates. Matt were joined nowy the b. N. P. Paribas chief economist. William, thanks very much for your time this morning. Trump tweeted the other day that negative rates would be a huge gift for america what is your view on whether or not powell will do it and whether or not it will help . I think it will take almost a for the fednd to change its position on this. This is really like an existential question. Do we want to go to negative rates . The key question pob answered is what difference does it make . In the u. S. Like in europe and across the globe in advanced economies, this is not a situation of rates being still too high. They are very low. Also if you dig into identities, inflation. It is a matter of how much credit risk is there to the system and what should we do about providing guarantees . Things that the fed really hasnt been doing. Oving to negative rates. Anna you continue to see what ifference it would make. The unemployment story here, the way that the very parts of society now have to respond. Im sitting here in the luxury of my own house. Others having to go to work. This is something that powell referred to. The way that this has been unevenly distributed. You look at asset price movements. From an economist perspective, how is it that were seeing different parts of society impacted very differently here . It is rather relevant. After the 20082009 recession. Ut even more so today. People are in great difficulty even with the healthcare expenses in the u. S. If you look at what powell was saying yesterday, how much that is concentrated in the lower income bracket. For years to come, it will have a big influence on the agenda and it will also have an impact on the rates people vote on all of these measures. Matt absolutely. It seems like the kind of thing that increases income inequality at a time when income inequality is particularly low to begin with. I wonder what you think about the possibility of a vshaped recovery and maybe it is a different conversation about which strata are affected. Goldman sachs now says it expects a 39 drop in g. D. P. In the Second Quarter but a massive, i think 29 increase in the third quarter. It is not a v. It is more of a very steep swoosh. Does that kind of recovery make sense to you . This is what i would call the recovery. It is very important to ifferentiate when it is listed automatically, activity picks up by definition. The really important question is whats happening afterwards . And you could say if you have run out of ideas, you could also call it a square root sign. A mechanical recovery and then it is flat. I think powells speech yesterday kind of reminded stock Market Investors that there is a possibility after a mechanical rebound it will be pretty flattish because of so much uncertainty that is still lingering and also because of e more lasting repercussions to have blow that Balance Sheets for companies are suffering now. Anna we talked about negative Interest Rates in the u. S. You were not sure what difference it would make but it seems to be catching. Look at guild markets. New zealand. Various fixed income markets turning negative. Building in the expectation that we will head there. Does that worry you from a fundamental marketing perspective . No, it doesnt really. As you know in the eurozone, we have been in such an environment for quite sometime. I think most of the feeling is that the e. C. B. Is now in recent decisions clearly sent the signal that you have to look for they are else and offering liquidity for the most active banks, i would say at the cost which is below negative deposit rate is very revealing. What it means is there are other things a that you can do than continuing to drive down Interest Rates in negative territory. Matt all right, william. Were going to keep you with us. More from william, the chief economist at b. N. P. Paribas here in the program. Right now i want to give you the Bloomberg Business flash. Todays top corporate stories from the bloomberg terminal starting with drugs. Americans will likely get sanofis Coronavirus Vaccine first if it succeeds with that task. The french pharmaceutical giant said because the u. S. Was first in line to fund the research. The chief executive paul hudson is warning europe risks falling behind unless it steps up its efforts to fight the virus with cash. Fiat, chrysler have agreed to scrap the dividends they agreed to pay as part of their merger deal. The boards of both manufacturers said preparations for their merger are still advancing well despite scrapping that dividend. The deal is on track to close before the end of the First Quarter of 2021. That is your business flash. Anna . Anna coming up then on the program, more about italy. Italy passing a muchdelayed stimulus bill, but what kind of edge will it take off the recession we expect to see there . More on the italian story next. This is bloomberg. Anna welcome back to the European Market open. We are still 50 minutes to go until the start over the trading for the European Equity trading day. Now lets talk about what is going on in italy. Italy has double down on its stimulus efforts approving a much delayed 5 billion euro package to help families hit by a twomonth nationwide lockdown. Extra funding for companies and tax cuts. Our guest is still with us. William, good of you to stay with us. On this subject of italy. The same question i could pose for other places. They pass this extra fiscal spending measure. The question remains how this will be paid for. The Big Questions around whether europe is has the appetite, the political appetite for any kind of shared debt. What are your thoughts on that . Well, first of all, the message was necessary. It was communicated yesterday. Very important. It is not a time to question the necessity to do so. The auction yesterday went fairly well. Of course the program of the e. C. B. Plays a very important role. We are now impatiently waiting to see the details on the european recovery. Whether that is going to be created by the european ommission. A very committed tone coming from angela merkel. Insisting on the fact that we should do something together. It is important. Politically, historically. And to send a message in germany is very important so that people over there realize we are lucky. This is the easy part. Matt it is not really luck. Is it really luck, william . The germans were pretty tight fisted when it came to spending. They have been very conservative. They collect a ton of money in taxes. They are pretty fiscally responsible it would seem relative to the italians and i wonder if you think italy is ever going to be able to get out of the situation it is now in. They are looking at probably 160 debt to g. D. P. And of course tax receipts are not really going to pick up that much even after the lockdown. First of all, youre quite right in correcting me using the word luck. It is probably better to use fortunate. The best efforts have suited germany very well. The problem that you have is hat in so many recessions, you accept an increase in your budget. It increases your fragility next time around. Then you have another blow and it pushes the burden from 130 to probably 165 g. D. P. That makes it very difficult to drive it down even further. That is true. On the other hand, my insistance on germany and in particular Angela Merkels goal to show solidarity also needs to be nsidered in the context of germany. Matt absolutely. It will be interesting to see whether some form of Debt Forgiveness is necessary to get the peripheral countries out of the situation they are in now with help from the companies that have benefited from their export industry. Thanks for joining us. Chief economist at b. N. P. Paribas. Up next, well talk to the c. E. O. Of germanys merck to see how long he thinks the pandemic will last. These days staying connected is more important than ever. So were working 24 7 to maintain a reliable network, to meet your growing internet needs. Were helping customers who are experiencing Financial Difficulties stay connected. Were increasing internet speeds for low income families in our internet essentials program. And delivering selfinstall kits to your door. Nos comprometemos a mantenerte conectado. Were committed to keeping you connected. For more information on how you can stay connected, visit xfinity. Com prepare. Anna welcome back to Bloomberg Markets european open. Still half an hour to go into the start of the European Equity trading date and it looks like it will be a negative one. Let me tell you about some of the things that are happening in the day ahead. s Monthly Oil Report on the ecb publishes its monthly bulletin. 1 30, weondon timeout will get u. S. Initial jobless claims for the week ending may 9. That has been a real focus for markets. Lastly, we will have comments throughout the day from three different fed president s, robert kaplan, neel kashkari, and raphael both sick all speaking. Some of the comments really moving the market, in particular, the comments from powell. Actually, the fed comments have been fascinating lately from bullard to kashkari to bostick to powell. Everybody has been out speaking and we have been paying very close attention. Lets get to germanys merck. The company says earnings may be little changed this year as the covid19 pandemic takes a heavier told bennett at to speed last quarter a heavier toll than it did last quarter. Kgaa has also donated 2 Million Masks in germany, france and the u. S. It is really helping with the fight to get workers on the front line protective equipment. Joining us now is Marcus Kuhnert , the cfo of merck. Theme first ask you about expectations that have changed. I mean, youre not alone. I think pretty much everyones expectations have changed a lot in the last three months. Do you now feel like you have decent visibility into 2020 and 2021 . Two through to marcus good morning . To be honest good morning. To be honest, the answer to that question is no. From march 5, we are transporting today our current viewpoints on how we see the corona pandemic to evolve over the further course of the year. Of course, we have now more information at hand. We know not only china will be affected, but basically, all of the big regions in the world. Of course, that can change. The dynamics of the pandemic can further change going forward. We need to stay alerted on this. We are quite confident at the moment that we have, i would say, a realistic view on the development from the current point of view. Anna good morning. Let me just depress you a little more on that. You used the word normalize in your release this morning, talking about how the outbreak would normalize by the end of the third quarter. If that were to be the case, do y