From the bloomberg terminal. A 2 trillion dollar wipeout. U. S. Equities see their worst rout in 12 weeks. Is there more to come . The precipice of disaster. Americas fourthlargest city but it may reimpose Steven Mnuchin says the country cannot close again. Plus, european banks close to Capital Requirements. Just under an hour away from the start of trading. Futureske a look at after the big drop we saw. Saw drops in asian stocks overnight. If you look at yesterdays cash a drop in the dax. 559 points. 559 point drop. In terms of u. S. Futures, we see a little bit of green on the screen. 1. 5 gains in s p and the dow. Can news on the u. K. Economy, lets get straight to that. The u. K. Economy shrank by 20. 4 . That is versus the previous month. Dropstimate had been for a of 18. 7 percent. 19 or so. It does show a stunning drop in output for the u. K. Economy during specifically the month of april. The u. K. Went into lockdown around the month of march. We are getting some other numbers as well. Industrial output falling 20. 3 to more than the estimate penciled in. Of the otherme details comingwc through, construction numbers, services. Construction following 40 . We will get back to the u. K. Economic story. Conversationo that with david owen. Market. T back to the we saw a lot of that. , markets,ean stocks down by 5 in the session yesterday. Will is a sense perhaps we pause. The focus does seem to be in a second wave and a host of other factors to see if they were at fault or to blame for this selling. Was it about what the said the fed said about the economy . All of those talked about in the past 24 hours. A lot going on in markets. As the u. S. Had its worst selloff since march. H1almost 2 trillion erased from equities. What drove that switch and sentiment . Risk off a classic day. We should not be surprised by a reprieve. We got statistics on infection rates that caused concern. The conversation has shifted to is there a second wave . What we heard from jay powell really changed the mood. It is charitable to sobering comments. Jay powell put a dose of cold water on what is happening. Intothink we got mold complacency in the virus. It could be a healthy thing the market drifts lower. I dont think it is that surprising we are taking a step back. I dont necessarily think this is a sign of panic. This is the reckoning a lot of us are waiting for and we waited a long time. Lets get into the markets now. Our macro strategist. We will have to kick it off with the question of the day. Was it a sign of more to come . It is a host of factors that can trip it it. Speculation, the market is coming crashing down to economic reality. Ultimately, there is not an obvious catalyst. Too much, too soon. Covid19 doesnt warrant caution. It is looking like a spike. Just the overstretched valuation ther a 45 bounce from march lows leaves equities vulnerable. After recent bullish sentiment. Blaming the fed, the signal they are not going to raise rates, billy was more of a fuel than a spark. If you look at european equities, those begin to sink lower. More of a healthy correction. A significant selloff Going Forward. Asian markets taking this in stride . Seem to be recouped. Is there a sense of a second wave or perhaps a continuation of the first wave in the u. S. . Become itstarts to starts to become a u. S. Story rather than they global one . I think that is the case. If we look at what is happening in europe, there are indications the recovery is starting to take shape. Virus infections are taking higher. Ultimately, they do remain contained. Valuationis with the story in the u. S. If we do see a flareup in u. S. Infections and that does materialize, the search for yields and the improving does supporturope this rotation. Potentially, asia is ahead of the curve as well. Not really improving and the u. K. I realize it is separate from europe. 20 point 4 drop in april gdp. Is the u. K. Worse off than anywhere else . Aprilyou look at the numbers, that does capture the peak impact of the lockdown. Down 100 for the month. I think Going Forward with lockdown measures being gradually lifted, we would effectively see some of this ease. Going forward, crucially for the u. K. , is how we escape from this lockdown. I think the u. K. Is going to be more challenged. A lot of folks, thank you very much. Bloombergep the1n live strategist. You can join in with the question of the day. Is thev function to use. Up next, the imf says the Global Economy is recovering more slowly than expected. Its chief Economist Says it will bear lingering scars. This is bloomberg. Welcome back to Bloomberg Markets. We are 47 minutes away from the start of cash equities trading. You can see european futures are down. A horrible day yesterday. Both in terms of european and u. K. Index losses and then even worse in the u. S. Bloomberg first word news, here are the top stories. The u. K. Planning to introduce soft border checks with e. U. The measure is temporary, and effort to avoid hitting business already suffering. This comes as britain and the you step up the pace of negotiations. Houston may be approaching the precipice of disaster, according to a senior local official. Reimposingclose to stayathome orders. The warnings highlight the danger of a second wave of infections beyond the initial hotspot. The virus has killed 113,000 americans. The u. S. Cannot shut the economy again, even if there is a second wave of infections. Treasuryccording to secretary mnuchin. Speaking on cnbc, he said shattering again could cause more damage but also said it will not be necessary. Tracing arecontract improving. And officials have a better understanding how to contain an outbreak. Lets talk about the Global Economy and the extent to which it is recovering or not. The imf says the Global Economy is recovering more slowly than expected. The chief economist said it will bear lingering scars from the experience. Given the need for reallocation of labor, way, theation in a big bankruptcies and solvency issues, and the prospect of changes in continued havey are, one has to be quite concerned about partial recovery. Variables point to significant scarring effects. Our conversation this hour. Very good to have you with us. We are defined going to get to the u. K. Data and the shrinkage of the u. K. Economy. There is a lot going on in markets. We wanted to start with a Bigger Picture conversation. Given the concerns around the Global Economy and the selloff in risk assets, that raises questions about wealth effects. How you can put into context the big move we are seeing in markets and the slow pace of recovery for the Global Economy . We are not really following the markets. Clear there will be setbacks in the way, even assuming economies need to reopen. And life slowly but surely returns to normal. To be very deep scarring. Covid is going to come to a fundamental reappraisal of things Going Forward. Many things will not go back to normal at all. To work its way through this. ,here will be some Sectors Companies that actually do well. We are seeing policy responses that are unprecedented. That will lead to repricing over time. The Bigger Picture is, the market is going to have a ndifficulty working out wheree world is going to be. This is completely unprecedented. Obviously, not following the minute by minute moves makes everyones job a little easier. Central bankers have learned you have to follow the markets broadly. Has to watch liquidity in the u. S. Think theseyou Central Banks are concerned not about disastrous drops but blowing up bubbles . The important thing for the Central Banks, it is very obvious with the bank of england , they want the Banking Sectors to be part of the solution. Unlike the great financial crisis, the banks are the epicenter of the crisis. Were all these parallels with the Great Depression of the 1930s where money fell by 30 . Sure, the Banking Sector in the financial crisis did not go down. There are credit lines being extended. U. S. , the u. K. , the eurozone. Kithank lending is increasing. It is currently growing over 7 per year. This is a major downturn. That is one thing banks are keen on. They continue supporting the economy. And then we have concerns from the bank of england. Banking sectorw being part of the problem. These very crowded trades. Central banks are looking at that. They are looking at the spreading to germany. At the end of the day, they cannot do everything. Out howhave to work things will look in the future. Thank you very much. David owen, chief european economist. Out on how thea economy contracted. Cushioning the blow, coming up next. The u. K. With plans for border checks. To help is this is suffering from covid fallout. Is it enough to avoid a more painful recovery . This is bloomberg. Welcome back to European Market open. 40 months to go until the start of the european trading day. We pulled back from some of those earlier losses. Be down by 1. 1 . Temporarily doto light burger checks with the eu border checks. It is an attempt to soften the blow to businesses struggling with the coronavirus. This came as the u. K. Economy shrunk by more than 20. 4 . Lets get back to david owen who is still with us. Looking at your notes ahead of the conversation, do think it is possible we see some sort of extension to the brexit or post frexit trade conversations later . In theory, the end of this time is supposed to come this month and theyre supposed to be a decision about an extension. You think that could come later in the year. Why so . According to the eu and brexit, anything can be fudged. There is a chance the government is going to offer an extension. Again, making that clear. It can be fudged. There is something published recently. Any of the constitutional lawyers working alongside are excepted. It can happen. The politics are interesting. Taxes which are going to be most impacted by a hard frexit are those which unfortunately have been impacted pretty badly by covid. Boris johnson his 80 seat majority. You have to think, this could all change. People in those regions do not want a brexit. It will be interesting to see the reactions to this proposal. There will be a light touch. Trade goes both ways. Seeill be interesting to to trade, also the response go well. It is a negotiating tactic but is it going to fly . Question two and i understand about some people not wanting a no deal brexit but how would it hit gdp . Nothing like the hit from covid. It is brexits life. Discuss isld wish to most of the discussion is about trading goods. U. K. , and indeed for europe, the Service Sector which theso important, intellectual policy, research u. K. Opment, financing, the once access to services. Too much focus in the Service Sector, the u. K. Excels at services. We need access to continue trading with the biggest market at our doorstep, the eu. Ok. I think all these things are going to we really interesting. I learned all about mode five services and the export of those permit think you for joining us. Herks for bringing us to and global growth. Will join the cac 40, that conversation with the ceo and founder coming up next. This is bloomberg. Matt welcome back to Bloomberg Markets, this is the european open. Losses wey of huge are looking at futures here in europe that are still pointing down. U. S. Futures a little higher this morning. French Call Center Operator telegraph on its will replace rmance, call volumes are continuing to increase, expanding their essential services role. The index change will come into effect monday, june 22. Addt of funds will have to their shares to their portfolios. Ceo, danield by the julien. Will bere Fund Managers buying and sharing, and investors participating in the business. What does this change for you . Is giving usnk it more visibility. Our shareholders are 50 anglosaxons. 25 other firms. It is a representation [indiscernible] the telecommunications power, computing power. These powers are converging 5together. Aboutyour business is all customers, businesses need to interact with customers whether working from home or from the office. What difference has the work from home trend may . Can you give us any numbers . We have been affected by the pandemic. Inwe have an operation china, we saw what was going on. We rebalanced our operation from brickandmortar to remote working. Months, we have 80 of our people working at home. Means a lot of logistics. [indiscernible] it has been very interesting. We were able to get the same kind of quality with workathome that we have traditionally with brickandmortar. Matt do youin think you will be likely the boosted shareholder, the Broader Group of investors from m a . Does this give you the opportunity to make purchases . Do you have your eye on any targets . Over the decade the growth has been strong organic , and to make specific acquisitions with value. India, acquisitions in developed digital integration. , we arewth strategy looking at companies that have the dna to build the future. Anna you founded this business in 1978. Since then it has been a bumpy the positive bride in terms of a positive ride in terms of the stock performance. I started this company , today we are in 80 countries. [indiscernible] life. Not a job, it is a [indiscernible] it is going to give them more energy to succeed. We are extremely happy. The beginning of a new chapter of our lives. Matt thank you so much for joining us. Daniel julien, chairman ceo, teleperformance. It got a huge boost from the work from home changes we have seen. How long will they last . What we know for sure is teleperformance will be added to the cac on june 22. Stepping up into the big leagues , and in index terms after his business showed a big pickup. Up next, snubbed by america, germany turns to china as merkel pushes for access for foreign companies. This is bloomberg. Matt welcome back to Bloomberg Markets european open. We are 20 minutes from the start of cash trading. After the huge route in equities yesterday here and in the u. S. , we are seeing futures point down again today for europe. If stocks fall today, they will have lost ground every day this week. You can see u. S. Futures are actually pointing up after the on u. S. Drop yesterday indexes. European futures are lower. The bread first word news, top stories bloomberg first word news, the Global Economy is recovering more slowly than expected. It will bear lingering scars from the pandemic, according to the International Monetary fund. The imf released its latest growth projections that are likely to be worse than the 3 contraction it predicted in april. West texas crude is heading for its first weekly loss since late april on fears of a second wave of virus infections in the u. S. Could derail a fragile recovery. Access supply. Markets shrugged off a pledge by opec to extend their output cuts. The u. K. Economy shrank a record 20 in april as businesses revealed under the coronavirus lockdown. The contraction follows a 6 drop in march. Those figures, difficult week for the Prime Minister, under pressure to reopen the economy more quickly while facing criticism for his handling of the crisis. 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. Angela merkel has reached out to tona to allow marketr; access foreign companies. She spoke with the chinese premier yesterday to discuss an ambitious accord between the eu and china. Thursday marked the 500 million euro deal between the chinese partner making volkswagen the number two foreign carmaker in that nation. This comes days after President Trump stunned germany by a plan to pull troops out of the country without any forewarning, and russia has been involved in this drama. Lets talk through some of it with lars p. Feld, professor, Walter Eucken institute, one of the socalled wisemen. Thank you for joining us. Let me ask you about this bridge to china. It looks as if the chancellor and the eu are building bridges to china, where the u. S. May be burning them. One of theis programs germany and the eu followed for quite some time. They wanted to have an Investment Agreement with china for a longer time, and now tried to conclude it in difficult times due to the coronavirus pandemic. I do not think it is a reaction to the difficulties that have risen with the u. S. In recent times. Where do you see the relationship between germany and china heading . Lars the problem with china has , they wantedcently to invest considerably into firms in european countries. The eu and germany have reacted with further restrictions on Foreign Investments from china, now they tried to have a reciprocity agreement in order to access the Chinese Markets more considerably. On the other side, also be able to remain open for chinese investors. Matt where do you see the relationship between the germany and the u. S. Headed . We have reports of President Trump snubbing Angela Merkel as she is trying to step up to vladimir putin, and pulling troops out is not a good look at a time like that. I have the impression some people in germany feel to wait and see what the president ial elections will bring. I think the relationship with than. S. Is going deeper only looking at heads of state. Furtherthere will be cooperation between us. The u. S. Is the most important market for german products. There will be a real conflict between the u. S. And germany or the u. S. And the european union. For is it still advisable Angela Merkel and germany to push for a pipeline between russia and germ