Two million for the nante straight week. And the fed could hold further guidance until the fall. B. O. J. Upped the board for Small Businesses. The question you may be asking yourself in the market today is where the focus will shift in todays session from reopening to escalation. Hong kong very much the focus over the abandonment of the growth target for this year which was widely anticipate. The central bank that we learned overnight is india unexpectedly cutting rates with g. D. P. Set to shrink. We had that note from goldman talking about the worst recession ever in the Second Quarter for india. Weve got a 40basispoint rate cut to 4 from india today. Little bit of weakness in the rupee. In terms of the broader market, youre seeing the hang seng lead those losses in asia there is red on the screen across asian markets. Also u. S. And european futures pointing to a lower open. A clear risk coming through today. The 10year treasury yield drops by three basis points toward the 64 and oil as well on the back foot retreating quite significantly from its highest level in more than two months, still heading for a weekly gain, fourth consecutive weekly gain. China has told the National Peoples congress that beijing will reinforce National Security in the autonomous region of hong kong. This after beijing announced dramatic plans to rein in dissent by writing a new law into the citys charter. An opposition lawmaker in the city called the move the end of hong kong. Oining us is bloombergs coanchor, tom mckenzie. Good to have you with us. Why is the Hong Kong Security law so controversial . Run us through the details. Tom this is a security law, nejra, that hong kongs own government has been trying to push through an get enshrined and written into the books for years and they have failed. Toe despite having a majority of lawmakers the opposition in hong kong has been so strong. It led to protests in 2003. When they tried to push the security law through so now beijing is taking the opportunity when much of the worlds focus son the coronavirus to circumstance um 1 2 vate the Hong Kong Goff and push the security law through. Now beijing says this is necessary to ensure the territorial integrity of china and to give lawmakers in hong kong the power to crack down on what they say are terrorist activities in that city. Secessionlaw aimed at and foreign interference. The fear from those in hong kong, prodemocracy activists and lawmakers is that it will further undermine the autonomy of the city and undermine the free press an free speech that hong kong enjoys. Or s you noted there, one both pro democracy lawmakers in hong kong said it could ult montanaly spread the end of that city. The Trump Administration is new empowered by the bill passed by congress at the end of last year on hong kong to review the citys status. He could revoke some of hong kongs special trading rights that the city currently enjoys with the u. S. Nejra that takes mu me to our next question. Well talk about the growth target in a second. What we heard overnight in terms of hong kong, whats that likely to do in terms of u. S. China tensions have have been ramping up recently . The situation relationship now between beijing and washington is toxic. The one thing that seems to be holding the two countries together nominally at least by a thread is the phase one trade deal. We talk about that in more depth. It certainly pushes the two countries further apart and youre seeing the senators bypass it once again in the u. S. Pushing a deal that would punish china for any move to impose the security law, it would impose sanctions on entities that would enforce the security law and banks do work an business with those entities. You could then in theory be looking at u. S. Imposing sanctions on chinas major banks which would be significant. Look ld make the push insignificant in comparison. Youre seeing this push now and we expect further rhetoric and strong words and potentially action from the Trump Administration lead ugh up to november elections. Nejra lets talk about the growth target as well, tom. It wont come as a surprise to many that china abandoned the growth target for 2020. It looks like the focus is very much on employment. What else should we read in terms of the details in terms of whats come out today in tom first time they drop the g. D. P. Target since 1994 because of the uncertainty over the virus, the Global Economy. Not a major surprise but significant nonetheless. Emphasis shifting to supporting jobs. S that job mark thats been hammered. Youre looking at potentially 130 Million People unemployed or furloughed. Youre looking at the official Unemployment Rate at 6 . Most economists think its anywhere between 10 and 20 in reality. Of course you get a lot of joblessness in china, that points to concerns about sorle stability and yale how the communist party justifies its existence. This is the issue that keeps them up at nite. Youre seeing a target to create nine million urban jobs by the end of 2023 to have an official Unemployment Rate of 6 . Also more support for small and Medium Sized Enterprises that create the bulk of jobs and employment in china. 5 of jobs created, more tax cuts and more Infrastructure Spending no big surprise there youre looking at almost half a trillion of Infrastructure Spending as well. On the Monetary Policy front, we expect more cuts to the Banking System. No, i rah and the budget deficit target wide tond more than 3. 6 of g. D. Perform. That was Bloomberg Markets coanchor Tom Mackenzie from the forbidden city in beijing. Now to the first nude, indias Central Banks cut rates in an unexpected announce thment morning. Its ramping up support for an economy facing its first recession in four decades. The benchmark repurchase rate was lowered by 40 basis points to 4 . The reserve banks next meeting wasnt scheduled until june 5. President donald trump decided to withdraw from the open skies treaty, an arms control act designed to promote transparency transparency between the u. S. And russia. The president is citing violations from moscow. Aying. He move wont take the move wont take place for six months. There are just over 300 pandemic cases and no deaths. With many countries shrinking, the Prime Minister said his country could still grow as much as 5 . Certain macroeconomic indices as overspending, therefore we have sed the set the g. D. P. Growth of 2020 to be 5 . I believe this is the highest g. D. P. Growth expectation in asia at the moment. Nejra global news powered by more than 240 journalists and analysts in 120 countries. China abandons its practice of tting an annual g. D. P. , we discuss this with our guest. This is bloomberg. No, i rah this is bloomberg day break europe. There might be a bit of reatrazal of geopolitical risk in the market today. Hang seng down after what we learned from the n. P. C. Red then screen in asia and also for u. S. And european futures 10. Year yield dropping. Seeing Dollar Strength across the board in g10. In Dollar General thats reflected not so much. The yen on a 107 handle, oil retreating strongly but heading for a weekly gain. China has stirred big hornets nest on hong kong. They told the Peoples Congress they would enforce National Security in the autonomous region. They announced a new law. An opposition lawmaker in the city called the move the end of hong kong. Joining us now is andrew sheaf, chief asset analyst at Morgan Stanley. Before we got this news overnight from the n. P. C. , the market was starting to get, the equity market at least, yitry on the escalation of geopolitical risk between the u. S. And china. Are we waking up to a new geopolitical risk today with hong kong . You know, i think there are a couple of overlapping elements here. I do think it looks quite clear that that china is going to be a central focus in the u. S. President ial election. I think its notable that i think both candidates, both joe biden and President Trump have advocailted a relatively, i think, hawkish position toward china and china trade. So i think this an issue where there maybe one issue where theres bipartisan support to remain to maintain a relatively tough trade stance. And then i think as you mentioned, theres this specific issue around around recent events and whether or not that would affect the annual u. S. Review of the hong kong human rights and democracy act. Secretary of state pompeo initially delayed that review. Potentially waiting to see potential actions that china might take that review is still to be done. I think thats potentially the next thing that markets will need to watch for to see, does the u. S. Take any steps on the back of recent headlines. Nejra with the market watching that, how significant are we a repricing could we see, andrew . Andrew again, i think there are a number of moving parts here and i do think timing is important. Even with some of this legislation you see in the u. S. Senate regarding potentially changing the terms for listing listing Chinese Company rrs making it more challenging for them. Its not clear yet if Senate Majority leader mcconnell will allow that to come to the floor as opposed to potentially tabling it and waiting to see if theres a more opportune time to do that or waiting to see what happens, what actions are taken from chinas standpoint. I think the better way to think about this is, this is a longrunning issue. I think this is an issue thats going to be with us for months. I think there will still be a lot of back and forth. I think theres actually a case that the shortstoppest escalation could occur closer to the u. S. Election when the issue is kind of more on the minds of voters when, you know, you could argue theres a stronger incentive for the u. S. To take a tougher line when its own economy is doing relatively better, obviously the u. S. Economy is extremely weak at the moment. So but i think this is an issue where, you know, investors have to keep an open mind but ultimately, you know, we dont think its an issue that overwhelmed the market negatively now but i think it is a key issue that we need to watch as we head into august, september. Nejra not overwhelming the market now. Obviously what we also learn ned n. P. C. Overnight with china abandoning its growth target for this year, very much a focus on employment and mfsment coming through and some guidance as well in terms of stimulus. What sort of strategy do you want to take around china at the moment . Some people have said that looking with the stimulus on the cards, high yield is a place they want to be in china. Would you agree . Or are there other areas that atch your interest more . Andrew its several things. Globally, this goes back to my previous point, overall i think its a constructive back drop. I still think you have large amounts of policy stimulus, large amounts of fiscal stimulus. We saw china announce announce yesterday or overnight where they will also be driving some of their largest fiscal deficits on record at the same time the United States is driving its largest fiscal deficits on record. And i think all of this is happening at a time when the global data is starting to improve and investors are understandably, i think, still cautious. So i think all of that is a generally constructive backdrop even in light of kind of recent geopolitical concerns. I think specifically for china, we actually think china, domestic equities can outperform their e. M. Counterparts. Thats a function of chinas larger domestic stimulus. Its a function of chinas growth. Rebounding faster than the broader emerging marks and a better china consumer story is that stimulus is focused on the consumer more so than the s. O. E. Sector. Jra andrew sheets of Morgan Stanley stays with us for the hour. Up next we discuss the state of the u. S. Economy. This is bloomberg. Slt nejra this is bloomberg day break yurp. The National Peoples congress has opened in beijing this morning. At 10 00 a. M. London time. Shareholders will vote on a call to remove the companys chairman c. E. O. And c. F. O. As director. At 12 30 p. M. U. K. Time they release the account of its latest Monetary Policy meeting. Finally, ali baba is set to publish earnings before the u. S. Market opens. Theyre likely to report a year over year market decline in the march quarter. Millions more american applied for unemployment benefit last week, indicates that job losses are continuing two months after coronavirus pandemic started shuttering businesses. Initial jobless claims in the week ending may 16. Congress will likely have more stimulus legislation. Speaker nancy pelosi spoke exclusively with bloomberg about this. We know that issues like unemployment insurance, food stamps and the rest really are provide stimulus to the economy and we have to do that. And so we think in our package, the heroes act that we do just exactly that. A scientific path to open the economy safely. Safely. And soon. Supporting our heroes to keep those jobs in place which is important, which are important to the economy. An again the stimulus, for money in the pockets of the American People provides. The question on everyones minds the prospect of passage of the heroes act or Something Like that and when it might happen. Secretary me knew shin agreed something needs to be done, not sure how quickly. President trump said hes working on a package are you in active gos . How much hope do you have that well have something relatively soon . Im optimistic because the American People fully support what we are doing. 21 already. They support the provisions of our bill and oppose the senate obstructing it. So i have confidence in public opinion. Also when its bipartisan across the country, we have less than 1 trillion that goes to states, localities, and territorial governments that provide jobs for people across the country. So we had democratic and republican mayors, governor, county executives and the rest, very enthusiastic about the legislation and making their voices known to the members of the United States senate. This is very unusual that we ve such a strong, bipartisan advocacy for legislation of this kind which is meeting resistance in the senate. But i dont think for long. Because what we have in the bill is disciplined, its focused, its all necessary. And it has broad bipartisan support in the country. Just a matter of time. They want to pause but as i said here before, hunger doesnt take a pause. Losing your job doesnt take a pause. All of paying the rent doesnt take a pause. We really need to meet the needs of the American People. And at the same time, provide stimulus to the economy. You mentioned mnuchin but also the head of the fed, chairman of the fed, powell, has said that its the responsibility of elected representatives to use the tax and spend responsibilities that we have in a way that helps the economy. And he has indicated that theres need for more. I wanted to ask you also, the Inspector General controversy, just one quick thought about china. Another thing that appears to have bipartisan support is legislation including possibly delisting some chinese companies. Is that going to make it through the house . Might it have ramifications for the markets overall . This is something we just learned of that passed with unanimous consent. Ere wasnt much debate or so well review it in the house. I asked my committee to take a look at what that is. I take second place to no one in the congress, house or senate, in my criticisms of chinas trade policies with the United States over decades, the proliferations of weapons of mass destruction, right now whether its the uighurs, the people of hong kong, tibbett, they have been very oppressive and even more. So we have to have relationship with china and we judge every action as to what it means to us as well as what it means to them. So look for it. Interesting that it has such unanimous support though in the enate. Nejra that was u. S. House of representatives speaker nancy pelosi. Andrew is still with us. Do you see risk assets outperforming from the stimulus from feds and from congress . Andrew we think that applies on the equity side. Overweight u. S. Equities real ty to the rest of the world. I think for credit it could be a little bit more even where u. S. Credit and european credit i think perform similarly on a risk adjusted basis. We also look emerging market credit. On the equity side we do think u. S. Equities will outperform. A big part of that is the largest expected stimulus that weve had so far from the u. S. And further stimulus that we think will pass between now and the fourth of july. Nejra andrew, how does that fit also with your view that one good thing youre worried about is a faster reopening of the economy because that is certainly something President Trump has been pushing for. Andrew yeah, so, i think this is really important. I think theres too much kind of market focus and market debate as we talked about kind of the shape of the recovery on whether its going to be a socalled ushaped, slow recovery or socalled vshaped, faster recovery. I actually think thats something of a red herring as an investment debate. One because i think one persons view look one persons u looks like another persons v. Its a subjective way of talking about the economy but also because both of those recoveries fundamentally, even if its slow, a ushape still implies the wor