Chance of a vaccine by yearend. U. K. Tohnson asked the move on from around over his top a. Overiding requirements landing spots at key hubs. Welcome to daybreak europe. The tensions between the u. S. And china continue and we have interesting commentary from fed officials, talking about yield curve control. Thats the backdrop in turn of the feds. Seeing a fair amount of green on the screen, overnight also digesting the news of south korea cutting its right to a record low and cutting its gdp forecast. U. S. Futures have given up some of the gains from earlier. Youre seeing some negative come through on nasdaq futures on the report that President Trump is preparing to sign an executive order that could threaten to penalize facebook, google, and twitter for the way they moderate content on their site. Quite a bit higher on european futures after the plan coming through from the e. U. To the tune of 2. 6 trillion dollars, a radical plan. The tenure yield is steady and we saw that reaction in the euro yesterday, hitting the highest since april 1, extending gains today in terms of eurodollar. Elsewhere the dollar gave up some gains from yesterday. We saw some Dollar Strength after mike pompeo and yesterday session. Lets get back to the u. S. China tensions. To approve thed resolution before the National Peoples congress today. The premier will give his update after the briefing. In hong kong, Police Arrested more than 360 people. Tom mackenzie has been following the latest on the National Peoples congress. Great to have you with us, thanks for joining us. How has china reacted to the u. S. Decision . Tom this is a potentially major moment because for the last couple of decades, since 1992, the u. S. Has managed to carve out a special trading status for hong kong. That was contingent on that city autonomous, having a high degree of autonomy. As you mentioned, mike pompeo, the secretary of state in the u. S. Saying that no longer exists. They say hong kong does not have the autonomy, so that changes the dynamic. China has responded, putting out a Statement Today saying this is an internal matter, saying the security law that prompted the reaction from the secretary of state from the u. S. Is aimed at curtailing acts of terrorism in the city and will not impact the autonomy of hong kong and not impact the freedoms of the people of hong kong. Also theres the potential to change the trade relationship with hong kong, but that would have broad economic consequences for both the u. S. And china and the people of hong kong. So that is something the administration is weighing very carefully. The relationship is going from bad to worse. Long,is prepared for a drawnout battle with the u. S. Exactly. The u. S. House is also passed socalled bill sanctioning chinese officials. Tell us more about that and if respecting the mpc to address the issue today. This is a bill, that received backing from both senators and house of representatives from the republican and democratic side. It will now go to President Trumps desk for him to sign off on. Is talk about human rights abuses were more than a million muslims have been incarcerated in detention camps. According to the u. S. And the united nations, china says it is educational facilities and that the u. S. Is interfering in its internal affairs. We will see if theres any further response from china. It has been a sensitive issue because it is a border region with china so it speaks to the territorial integrity of the country. A briefing will give at around 4 00 p. M. Local time. In the next few hours after the signing off on the bill regarding security over hong kong. It may address the mounting tensions in the u. S. Whether he addresses that bill is unlikely. Conflictother point of between u. S. And china, Huawei Technologies cfo failed to persuade a canadian judge to end extradition proceedings. A lot for us to digest. Thank you so much, tom mackenzie, great to see you and have you with us today. Lets get to the first word news. The number coronavirus tests in the u. S. Has reached a grim milestone of 100,000. Book pollatest beige says the pandemic has damage the u. S. Economy. President rk fed predicts a pickup in the second half of the year. Think we are in a good place in terms of maybe we are near the bottom in terms of the economic downturn and hopefully will see improvement in coming months. I expect to see a significant rebound in the second half of this year. Isra the bank of korea mulling using unconventional policy tools to promote growth, forecasting the first contraction since the Asian Financial crisis. The decision to cut key rates was unanimous. Remarks from the central bank suggests it will be reluctant to cut any further. Russia and saudi arabia have agreed to coordinate on the opecplus deal ahead of a crucial meeting to discuss it further. Russian president Vladimir Putin and the Saudi Crown Prince discuss the market situation in a phone call as russia seems to be determined to start easing its output in july. 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. Coming up, the white house says it can no longer certify hong kongs autonomy from china. Of next, we will discuss the consequences. This is bloomberg. Nejra this is bloomberg daybreak europe. Ands look at the risk radar even with increasing tensions between the u. S. And china, we are seeing green on the screen in asia. U. S. Futures have given up some of the gains from earlier. Reports of an executive order from President Trump to Tech Companies. Risk sentiment coming through on the e. U. Recovery plan. Tenure yield a steady, little bit of a retreat in the yen and the dollar in line with the risk sentiment today. U. S. Secretary of state mike pompeo has told congress that hong kong no longer merit special treatment. The declaration has major implications and is likely to anger beijing. Pompeo said that no reasonable person can assert today that hong kong may take a high degree of autonomy from china. It follows beijings plan to impose a controversial new security law on the territory. Joining us is a find manager, great to have you on the show. We have seen equity markets for the most part shrug off the increasing tensions between the u. S. And china. You are quite cautious on Global Equities already. Does this issue add to your caution or make you want to change your Asset Allocation in any way . We are cautious on equities and we have been for a while, despite the fact that we have increased our exposure since the march declines. Were not considering the risk being imposed from the u. S. China trade tensions. Its more revenue focus rather than trade focus. We think that is why the market may be ignoring it. However, we think the impact , thebe more lasting channels will have a much broader impact. At the moment it seems to not be a huge risk. Nejra and it is interesting, i think i agree with you to some extent, to a large extent, really. The market is taken into account at the moment some of the risks that could materialize. How bad could this get, in your view . You said it could be more longlasting. Do you expect that more tariffs could be put in place, that we see a reemergence of the trade war that preoccupied markets so much in 2018 and 2019 . Relatedis less trade and more security and geopolitical related. In the case of the u. S. , it is in correction and putting pressure on capital allocations. The special trading relationship with hong kong is a big risk. We think that both parties are exposed, both the u. S. And hong kong. And if the u. S. As a trade surplus with hong kong, they also have a lot to lose in this. We think will see a lot less time. Tariffs this waya does that change the you would view certain countries or regions around the world in terms of equity markets . Absolutely. We think that technology has technologyell, companies have performed very strongly and have led the market higher. Types of pressure likely to see with regard to u. S. And china trade exposes more Tech Companies over the next few months. On the u. S. Side, there will be with regard to the influence china has on these companies. And there could be potential changes to the business model. With regard to the Access Technology companies have. ,ith regard to the tech sector it is exposed. Pressure is facing the and hong kong is likely to remain under pressure over the next few months. It might impact asias outlook with the em. Our guest stays with us for the hour. Coming up on the show, the beige book report finds the u. S. Economy was severely hurt by the virus. More on that next in our interview with john williams, this is bloomberg. Nejra this is bloomberg daybreak europe. The coronavirus deeply damage the u. S. Economy was steep job losses and business closures. The fed is also taking heart about targeting specific deals on treasury securities as a way of assuring borrowing costs according to the new york fed president , john williams. Take a listen. We are starting very carefully and will be discussing as a group, i dont have anything i can say about what will or will not happen. My view is this, the focus is always on just how do we best use the tools that we have. Whether our communications or guidance and whether its a Balance Sheet or other actions we take to achieve our goals. The economy isow likely to evolve. Right now theres just a lot of uncertainty about that. We are kind of in a good place in terms of maybe near the bottom in terms of the economic downturn. We hope we can start seeing improvement in the coming months. I expect to see a significant rebound in the second half of this year. The answer to your question is what is the right policy response and action . On how theitically economy is performing right now and in coming months. Right now it is still an unclear picture. Were getting a lot better information over time. What kind of rebound and recovery will we see . Even though its unclear going forward, have you imagined what its like on the others . We came out of the great financial crisis, potential growth was lower, around 2 or little bit less. What do you think potential growth will be when we come out of this . Asking,o follow up by in the sense that youre going to have trillions of dollars at zero to low Interest Rates that would be crippling of rates went up, especially to the u. S. Treasury. Are you going to be stuck keeping rates low even if you dont want to, for a very long time . Its hard enough to forecast where the economy is going to be going over the next several months. Forecasting what potential output will be in the next several years is even harder. Sure thatwant to make businesses that exist today are able to get through this period, and we dont have lasting damage to the economy. The way i view it is, the policies and Actions Congress has been taking or to try to not only minimize the spillovers from the pandemic on the economy, but the longerterm damage to the economy. The second question, the treasury obviously is issuing an , andous amount of debt there is also in ormiston man globally for u. S. Treasury securities, especially given a lot of the movement away from riskier assets. We have not seen any signs treasuryfor u. S. Securities, the markets have had to absorb that increase in supplies very effectively. This is not a situation where the Federal Reserve is constrained are limited in what we are doing because of what happens in terms of the issuance of debt securities. One quick followup to what you said about the trough opening up again, do you think barring a second wave of the virus that we have seen . Its hard to say, because the data is incomplete. Were getting an employment report from may to give a bigger datare and will get more over the next few weeks and months. Now, on what we are seeing i think we are pretty close. Maybe may or june will be the low point. Lets not forget, this is an extreme decline in Economic Activity and an enormous hardship for people in this country. Even if are starting to see stabilization there in terms of the economy, maybe a little bit of pickup, we are still in a very difficult situation. Thats new york fed president john womb speaking exclusively to bloomberg. The watch out for the latest release of weekly jobless claims and the second week of gdp to see if the economy suffered a deeper hit in the First Quarter than first reported. You say that bonds are a less affected hedge in your portfolio right now. Does the prospect of yield curve control in the u. S. Give you more conviction on that view as regards treasuries . You can control to some extent how far treasury youll can rise. We do think the fed will start itimplement control and could lead to a steeping of the yield curve. As though a gentle steepening of the yield curve would be quite good for financials. We think that treasuries are likely to stay in the range. Thats really our view. I think they were a fantastic hedge earlier in the year, right now, theres not much more that could be effective. Nejra if you look at the volatility through april and may, its been quite surprisingly muted, looking at the move index. Weve seen a move of Something Like 20 basis points either way on the tenure yield. Got Investment Grade and high yields in the u. S. . Giventhink right now where Financial Markets are, its an attractive asset. I think there are still a lot of Major Concerns around solvency and high yield is exposed. We preferred the ingressive Investment Grade earlier. Its to follow what the fed is doing. Dont fight the Federal Reserve, and the Federal Reserve is buying and has expanded their Balance Sheet to include these assets, and we think thats a bid for Investment Grade. Our guest stays with us, a lot more to discuss. Reopening. Cautious the disney ceo wants to take a slow approach to reopening theme parks. More on that next. Well carry on bringing you updates on the markets, which are looking pretty risk on despite the escalation of u. S. China tension. He u. S. Saying hong kong this is bloomberg. Nejra good morning from london, im nejra cehic. This is bloomberg daybreak europe. The u. S. Says hong kong is no longer autonomous from china. New securityass legislation today, but chancellor merkel talks about more cooperation from beijing. The United States reaches 100,000 rotavirus deaths. Anthony found she sees a good chance for vaccine by yearend. Boris johnson se u. K. To move on from around over his top aide. And a 9 billion euros german rescue requirement over lending plots at key hubs. It sets up a showdown. Welcome to daybreak europe. Tensions area still alive and well. Something the markets are digesting overnight as well as a rate cut from the bank of korea. We also have reports a President Trump is thinking about an executive order to penalize Tech Companies, meaning nasdaq futures have taken a little bit of a hit. Asia and s p features in the green. Of 2. 6 trillion. Will it go through . That is the question, but quite a big breakthrough came through yesterday. It does extend some of those gains, 10year treasury yields edges up slightly. Quite of picture of risk on across assets and the dollar almost given up its gains from yesterday on a broad basis. Oil extending declines, but is rather than the progress sentiment. The data showing an increase in stockpiles. A grim milestone as the United States passes 100,000 deaths from coronavirus. Global cases have top 5. 6 million with over 355,000 desk. South korea reported the most cases and seven weeks following following an outbreak at a distribution center. Disney has announced plans to reopen its theme parks in the United States. Andceo spoke to emily chang said disney is planning to take a slower and more cautious approach. Take a listen. We would notsaid open up again until we thought we could do so responsibly. We have some learnings from shanghai and our own Disney Springs retail and dining area that reopened up just a week ago. We have been able to make some learnings in terms of how you keep that social distancing. That is the key for us, keeping social distancing whether in restaurants, on main street or in attractions. We are confident we can do that responsibly. Emily inversely is planning to open up june 5. Why a month later . Bob we feel this is the right time for us in july. We have a different situation than universal because we are much bigger. We have a much more complex business. We have a different labor situation. At the same time, we will be implementing a new reservation system for our guests. It will take some time to take the millions of reservations that weve already got on the books and switch it over to new reservation system. So we think july is the right time for us. Shanghaiu been open in since may 11. Our people actually showing up with fevers and getting turned away . Have you gotten to that 30 capacity yet, and when do you plan to go beyond that . Bob everything is going extremely well at shanghai. I must complement are cast and the guest did for their cooperation. It takes the chemistry between both groups to help the whole thing work with social distancing. For us, the learning is that we stuck to our limitations that we placed on ourselves, and it has worked extremely well. We are up to about 20,000 guests per day and we are maintaining the social distancing guidelines that the government has placed upon us. We believe that as though social distancing guidelines are relaxed or somehow change, we will be able to actually grow please evenreally more guests than we can today. They i know youve got