Protests hammer u. S. Cities nationwide for a seventh straight night. President trump threatens to deploy the military to end what he calls the lawlessness in the streets. U. S. Futures slipped as new york goes under curfew for the first time in over 70 years. As we pointing higher said. The u. K. Virus infection rate falling to its lowest since march. And a second wave of stimulus cannot hurt. Angela merkel looks to broker a deal on a stimulus package with 100 billion euros here as the u. K. Chancellor plans to prepares plans to bolster growth after Emergency Support is withdrawn there. We are just under one hour away from the cash equity trade here across europe. Lets take a look at futures, keeping in mind that the german dax was closed yesterday. It is up about. 5 in terms of futures. Euro stoxx 50 futures, the 6 . Chmark up. Ftse futures up. 4 . They have been positive just about one hour ago, at least partially. Now mastec futures are still keeping their heads above water. We are seeing s p and dow futures down. 1 2. 2 . Tot are we seeing. 1 . 2 . What are we seeing . Anna strength coming through in the asian session. We see catchup being played by some of the markets that were closed yesterday. The indonesian assets jumped to the top of the gmm today but that was because a lot of those were out of action. We see some catch up there. Some strength coming through on the equity session. Asian equities up by. 8 . Futures a little bit of weakness come through. Concern perhaps about what that will do to the recovery picture for the u. S. Economy, what will it do to the civil unrest if we see u. S. Military on the streets . That is increasingly entering into the mindset of u. S. Based investors right now. Theres a lot of ifs still as to whether we see the military on the streets. President trump saying if states do not act. We are having better data coming through, albeit from a very low base. The pmi numbers of yesterday, all that adding up to a picture of least recovery. All of those things we knew to be true. It is good to see it coming through in the data, i guess. Manus take a look at the bloomberg first word news. These are todays top stories from the bloomberg terminal. Another night of unrest in cities across the u. S. President donald trump is threatening to deploy the military and calling on governments to dominate the streets. During his rose garden address, federal officers used teargas to disperse Peaceful Protesters just outside the white house gates. Pres. Trump if the city or state refuses to take the actions that are necessary to defend the life and property of their residence, then i will deploy the United States military and quickly solve the problem for them. New york is also extending its curfew to a second night amid looting in midtown manhattan. First time for new york city in 70 years. And hong kong leader carrie lam has blasted the u. S. For double standards. She is criticizing the Trump Administration for cracking down hard on demonstrators after it supported unrest in the Asian Financial hub. She also spoke out against plans to strip hong kong of its special trading status. There is simply no justification whatsoever for any government, any economy, to impose sanctions on hong kong as a result of a very legitimate process of the Central Government the central authorities taking this position to enact laws for hong kong to better protect national security. Time,and for the first hong kong has banned the june 4 gathering to commemorate the crackdown in tiananmen square. 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 . Lets talk about where u. S. Politics and demonstrations meet with markets. U. S. Futures slipping as investors assess prospects for the deployment of u. S. Military to quell social unrest in the United States. That is after President Donald Trump promised to deploy large numbers of troops if cities and states do not act to contain violence from protests over police brutality. Lets get more on the markets and the reaction to this, where we are seeing that, with mark cudmore, our managing editor in singapore. Good morning to you once again. In terms of the big picture here, what does it take for this to really filter into the market narrative, if you like . Troopsse imagery of u. S. On u. S. Streets clamping down on u. S. Citizens, that might go some way towards that, if indeed we do get there. Mark i think it is a very emotional story, very upsetting story from a humanitarian side, but it is not yet that big of a market story. There is an extra risk premium, like we saw yesterday morning on the show, the fact that it is generally a very riskon day but u. S. Futures are the asset class that is lacking. The dollar is slightly weaker as well. It is feeding into markets, the margin, but it is not considered a global issue. It is considered a u. S. Issue. It will slow the economic recovery and cause more problems. Whether it becomes a much bigger risk event, i think, if martial law is actually declared, which nobody really sees as a viable possibility at the moment, it just seems so beyond what is expected in the u. S. , and i do think there is a risk of innocent bystanders, if they start getting caught up in this at some point. I think there is a chance for this to escalate still, but at the moment, it is perceived as very much a u. S. Focused problem. It is going to pull back u. S. Assets but it is not a global issue. Matt we still have seen an incredible recovery in the s p until now, mark. From the coronavirus crash. Your question of the day, does or 28. 5000 go to 32. 50 first . What are you hearing . Mark more and more people are coming into the optimistic camp. I think the overall backdrop picture is that we see the Retail Investor that has been correctly trained it seems to buy the dip over the last decades and they did indeed buy the dip in march. It is one of the first times in a crisis that i remember in the past 20 years or even in a major risk aversion event, that the Retail Investor seems to have outsmarted the investor. In fact, what we have seen in recovery is that the financial investor, the hedge funds, have been the ones who have been short. Though they are short against a core cash long is unclear at this moment, but generally, it is the hedge sector which is the least under position to this rally. It is much more likely we see more topside ahead. Eitherly only is 6 in direction so it is something that we could be seeing on a very dramatic headline, negative headline, in u. S. And china. We could get that dip. Overall, the momentum is for higher prices. Stimulus has broken the connection with the economy and we should expect markets to continue to recover but i think the s p will continue to be the laggard in the overall Global Recovery scene. Anna and you mentioned there that theres the possibility, if theres negative u. S. China news flow, that we could see downside. The markets do seem to shrug off headlines that came through in yesterdays session around china not wanting to buy u. S. Farm goods. Sensible . Seem this seems Like Movement at the edge of the story rather than the meat of it. Mark i think that is exactly the right way to frame this. I think this is something to continue to watch, but china has made these threats before. During the trade conflict, they did say they are going to stop buying. It is part of the negotiation tactic. More. S. Has threatened tariffs in terms that china has not normally been the first to escalate on the trade front. My guess is the hong kong situation is serious enough for them that they see the u. S. As perhaps vulnerable at this time given the domestic problems. I think this is a negotiation tactic we have seen before. The backdrop is that the hong kong Bigger Picture hong kong story of china taking more authority is a longrunning story. It has been going on for a long period of time. It escalated last year. The most recent escalation was an intensification of a longrunning story. We saw on friday that trump chose not to escalate it yet once again and this may be the theme of the pboc supporting a stronger yuan, again trying to dial down tensions, so i think that overall, the market is going, you know what . We are going to move on from this. The u. S. Has other domestic issues. It will not want to block the trade deal. I think investors are thinking this will die down soon. A little bit nervously, but that is the general base case, and they are probably correct in that view. Matt thanks very much. Mark cudmore, bloomberg mliv managing editor, coming to us out of singapore. We member, you can join todays debate on the question of the day. Is the s p 500 going to reach out to us on the mliv team. Share your views by typing i. B. Plus tv on the bloomberg. Me, as youjust email do. Up next, spending through a crisis. Both the you can germany plan more stimulus to get them the e. U. And germany plan more stimulus to get them through the pandemic economic issues. We will take a look at those plans, next. This is bloomberg. Matt welcome back to bloomberg daybreak europe. Bloomberg markets european open. We are over 45 minutes away from the start of cash equity trading across european indexes and it looks like we could see gains at least at the open this morning. Efforts are being made to support economies still struggling as the results of the pandemic. Midst the in the u. K. , amid forecasts of the worst recession in 300 years, the prime minister, boris johnson, is planning to reset the governments agenda with a major speech and Financial Statement later this month. The chancellor is said to be drying up options to bolster the economy after the government withdraws its package of financial support. Here in germany, chancellor Angela Merkel is seeking to broker a compromise on a second stimulus package and will host officials from her Ruling Coalition, the cdu and the spd. Here in berlin later today, and she is said to be working on a deal worth between 50 billion euros and 100 billion euros. We are joined by the European EquityPortfolio Manager at allianz global investors. Thank you for joining us on the program this morning. What do you think about the stimulus that we are seeing . Of course, we have all been expecting the market has been expecting stimulus post pandemic in order to revive the economy. It is what you are seeing enough so far . Elements ineen two stages of the economy in equity markets are the first part of the recovery was driven by a reduction in this tale risks and the ongoing stimulus we have seen from governments across the board, here in europe and also in the u. S. What is much more important is what we are beginning to see now and we have seen with the rotation in the last couple of weeks. Investors have moved into cyclicals. It is actually the Economic Impact that lifting the lockdown has across the states, and that is what will create a much more sustainable economic recovery if and when that materializes and we can keep the reinfection rates low. Good morning to you. Do you think we are going to see any structural changes to the european economy or that kind of conversation gaining pace . When in the u. K. Yesterday a cabinet minister was asked about the economy changing, and he said the economy is going to have to change. And i wonder if that is just referencing stimulus, which it might be, or whether this is going to be something more structural, with change being directed at the top . We talked about Angela Merkel and her vision for the role of the German Government in the german economy. A period of more interventionist state pushing economies in certain directions. Marcus absolutely. I think coronavirus will prove to be a once in a generation event and substantially alter the way that we live and work on a daytoday basis for generations to come. You will see a much larger status as a result of that. We will also see economies and sectors changing significantly as well. The exciting part for us as investors is that it creates both risks and opportunity. What we have seen is an acceleration of the trends towards disruption and digitalization. It has been going on in the background for a number of years. A far greater pace than ever before. Likeu look at two sectors ecommerce or the payment sector, many of the companies we have been speaking to hear are describing penetration growth in a matter of weeks alone. This is something very exciting. What is unique about coronavirus is it is bringing a new cohort of consumers to the Digital World that probably otherwise would not have been attractive without the lockdown. Know, we hear j. P. Morgan has done some math asently and figured out that investment banks typically do after these drops, theres so much cash on the sidelines, and they provide big numbers that go far into the trillions, saying that, you know, investors are only 40 in stocks, and they expect them to be 50 in stocks, and that will help to fuel a rally higher. Where do you think that money is going to go if you do buy into that . As you rightly say, there is a huge amount of money on the sidelines already. We have already begun to see Retail Investor is buying the tip. That is one of the aspects that has fueled this amazing recovery we have seen in the last couple of months. Think the bigger issue is less the amount of stimulus but more whether we can keep the infection rate down and the shape of the economic recovery that we start seeing. See i think what is most interesting for us as investors is the commentary we see off the back of those results for many of the corporates when they start speaking in july and early august. Thank you very much for joining us. Stay with us. Marcus morriseyton stays with us. We will talk about the easing of the lockdown and indeed the risk of second wave infection. Countries start to emerge from lockdown. What sort of companies are best placed to benefit from the structural changes that coronavirus will bring . This is bloomberg. Anna welcome back to the European Market open. 40 minutes until the start of the equity trading session. The first trading session of the week for the German Market, of course, but elsewhere, the second. European stock futures pointing to the upside, up by. 4 . Less features point to little bit lower. Lets get to some of the new slow this morning. Countries starting to emerge from lockdown, particularly in europe. What sort of companies are best placed to benefit from the structural changes coronavirus will bring in the mediumterm . Marcus morriseyton is still with us. Anything to do with digitalization is going to be top of your list. Which of the Technology Business models that we are really drawn to . Marcus the Technology Sector is the most interesting place the most obvious example of where companies are benefiting from this transformation. You can access that through the software. Those with differentiated software. We have clearly seen the acceleration in the subscription and Digital Software or hardware as many of us like you and i are working from home, but also the i. T. Services companies that are enabling that digitalization. Interestingly, the survey was out recently and indicated that cfos not believe that 75 75 of cfos believe more than 5 or more of their employees will be working from home once this is all over. The companies are now having to realize that they need to either invest in their Digital Infrastructure or are likely to fail. Data is being created at a rate of 50 quicker than previous. So all companies are now having to invest in this Digital Infrastructure. The challenge for us is whichfying those trends will fade once the lockdown is over. You know, marcus, if i would try and guess off the top of my head which sectors have been hit the hardest, i would guess it is the airlines, travel and leisure. I would guess it is oil because of the incredible drop. If i did not have a bloomberg terminal in front of me, i would realize it has been the banks. They are down 36 , at least here in europe. The biggest losing Industry Group on the stoxx 600. What do you think about the banks right now . Say,s once again, as you the banks have been a difficult place to be. Bang for the last 13 years and structural pressures are likely to persist. We have a weak economic environment. At zerointerest rates in most places and drop arguably dropping lower in other places. Structuralny of the pressures of banks running legacy Business Models in a world that is being digitalized. It is an area that despite the low valuations we have decided to stay clear of in favor of other sectors where the growth path is much clearer over the long term. Anna we see lufthansa with the stabilization package. Expect to see a bounce in stock today as a result of that. You see consolidation in this sector. Maybe between lowcost airlines, do you really think that flag carriers are going to be bought or go under as a result of this or will we look at another sector which is the beneficiary or the victim of a lot more state intervention . Marcus the winners will certainly be beneficiaries. We see huge consolidation. As you rightly say, we have seen a number of either government bailouts or on a smaller scale, a few bankruptcies, but actually, almost all airlines, which have structurally changed balance sheets, are having to shrink to survive and that will create opportunities for those wellcapitalized airlines with differentiated Business Models and lowest in class unit costs so we are strongly of the view that the likes of ryanair will emerge from this crisis at a much stronger Competitive Position than their peers. What the wider sector looks like and that is a credible argument that we may have seen peak travel in parts of europe. I a