Good morning, everyone. This is bloomberg surveillance. I am francine la am francine lan london. We have to get to the news for not only eg markets but corporate rates announcing changes, also something that may help with the sickness when it comes to covid19. U. S. Equity futures also higher. Are looking ats coronavirus cases and focusing on monetary stimulus as well. One thing i want to show you is thatorth korean yuan, currency is no longer trading, but we did see a lot of withility this morning, crude oil mapping gains. We will have look at the markets, but first, lets get to the bloomberg first word news in london with dani burger. Hi, danani burger. Hi, dani. Dani good morning, francine. The u. S. Economy has a way to go, according to chairman jay powell. The economy is likely to see a period of significant improvement, but it will probably leave the labor market well short of levels seen before the pandemic. Chair powell the first days of the shutdown, and we have seen what that will reduce, which is declines of activity and increases of unemployment. That was q2, and we may be reaching a bottom on that now. Dani german chancellor Angela Merkel does not expect the eu to agree on its massive Coverage Plan until july. It is a sign of the difficult negotiations that lay ahead. The Program Needs to win the backing of every capital, but persistence on the size of the fund and how much it will run for. The plan at debate a summit for the first time on friday. North korea says it will deploy troops on its side of the demilitarized zone. The move further escalated tensions with its neighbors a day after destroyed a Liaison Office the two countries have shared. Says it will pay for any military action. China and india are being tested, after a standoff has ended in a deadly of salt for the first time in decades. Military spokesman for china simply said there were casualties on both sides. It is still unclear what triggered the clashes. Global news, 24 hours a day, on air and quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. I am dani burger. This is bloomberg. Francine . Francine dani, thank you so much. Now, u. S. Coronavirus infections are up by 1 , a jump of more than 20,000 cases in one day, with florida and texas most affected. Orderile, china is set to schools closed, visits to residential compounds have been restricted, and flights canceled. Has beenused drug proven to reduce deaths by rd and patients, by 1 5 and those using oxygen only. Now is our guest from bloomberg intelligence. He also covers the finance sector. How much of that will actually be a game changer . Good morning, francine. Lets not forget, at the end of the day, this is a drug that will now have proven in the sort of trial that we will all have been looking for, that it can produce mortality in various patients. Clearly this is not something that is going to help us limit the spread of the disease or anything like that, but it is an absolutely positive move forward , and it now gives us two drugs with which to fight the disease in patients who have been infected and have to go to hospital. Get pretty hopeful that we more of this kind of news in the next few weeks and months. You tell us,t can sam, it seems to yesterday, there was a story that the virus beijing, links to salmon coming from europe. Can you tell us about what that means in europe and what it potentially means about a second wave in europe . Sam i think it is telling us that that as soon as you loosen up, and you allow people to get perhaps a little too lax about spreading this virus, this is the kind of issues you end up with, as you can see in the u. S. , the second wave, whatever you want to call it. The virus is here. It has kind of become endemic. That means as soon as you turn your back on it, it comes back with a vengeance, and that is what it is showing. We are certainly on the path to be able to treat patients better if they are unlucky enough to end up in hospital with infections. Francine sam, thank you for the update, sam fazeli from bloomberg intelligence. Chairman jay powell on the u. S. Recovery. More on that next. This is bloomberg. Francine economics, finance, politics. This is bloomberg surveillance. I am Francine Lacqua here in london. Fed chair jay powell is giving assessment of the u. S. Economic recovery, talking about what is unlikely to return to markets level before the pandemic. That is also discussed by richard clarida. Hopefully receive close to record sales in may. Joining us now is stephen macklowsmith from jp morgan. It has been too long. When you look at this, what do you focus on . Is that the second wave or what the economy will go through . Stephen i think one of the challenges is the stock market will have to turn around. I am not an epidemiologist. So markets are greatly led by the data that is coming out on news infections, we have seen it. N areas around the world but if we think more broadly, one of the areas of the pandemics, just thinking about whether we are being compensated for taking risks. The framework for doing that is to look at reasonable forecasts for fixed income returns and reduce from that the premium, and if i just put numbers on that briefly, back in january, late january, when the s p was trading around 3300, we thought it was around four and a half percent. About eight weeks for a low, we had 8. 5 . So you had 400 points of risk premium, relative to fixed thought the riskreward track, the equation was tilted in favor of equities. Now, some of that equity has been what we have seen, but we think we have been in a situation where markets get back toward the lows, they get into set up territories again for longterm investors. Francine where do you see the equity risk premium, and what does it take to change that, stephen . Stephen if we switch the attention to europe, we think the lows, risk premiums, between 7. 5 and 8. 5 . If we pick up these levels, it is around 6 , 6. 5 , so it is not as attractive as it was. In a low growth, low return world, 6. 5 over a riskfree alternatives, that is actually attractive. Now the issue that you have to face is you will face motility o along the way. One of the things we do is to forecast volatility, and we can calculate short ratios, and it is still around 0. 4 percent, 0. 45 , which is reasonably attractive, but the highs were around 0. 3 , which is not attractive. Francine what do you think will move sentiment going forward, apart from a possible second wave . Is it earnings . Is it Inflation Expectations . Stephen yes. Analysts have taken a knife to earnings expectations. Obviously in the energy area, earnings or under massive pressure, and we have seen statements from both shell and bp recognizing that they have major challenges in the mediumterm. In financials also, because of what has happened to interest rates, you are going to see earnings that will deteriorate very sharply. Ks are going to have to go through another nonforming cycle. In the mediumterm, i think that we have actually crossed a bridge in europe, and we expect these things. I think the news that the European Commission is seeking to expand its spending capability by enabling it to issue debt is potentially a major game changer for europe. The details of that still have to be worked out, but it means that the spending has expanded absolutely massively. If that is now spent on measures soboost european positivity, the supply chains, improving transport infrastructure and logistics, improving the quality of broadband, then actually you can start to see improvement in overall european productivity, and given that we think underlying European Growth is that a very low level, any improvement for volatility is a fact. Francine steven, when are you expecting consumption to be back . If,onsumers still spend, not like levels in 2019, how much will that help with a speedy recovery . Stephen we think it will take a good few quarters for demand to recover. Our own analysts work on the exultations by sector, we see that as a positivity of where we see consumptions. Have a relatively dramatic fall in earnings around 30 and a partial recovery in 2021. It is not until 2022 that you start to get back to levels of consumption that we saw precrisis. So there will be a steady build, but one of the issues faced is Balance Sheets have taken quite a hit, because of people burn through cash reserves in order to fund current expenditure, and those cash reserves will need to be rebuilt. Francine do you see any value, equities . N asian there is a second wave in beijing, but in certain cases, they had seen to have cleared the virus before other places . I think theh, and underlying rates are just much higher than they are in the rest of the world, so domesticallygenerated is hardly anything in either america or europe, and that is going to be a Solid Foundation on which earnings can build, so, yes, in the mediumterm, i think there are opportunities there, too. The sins that we have is equities look the sensechly that we have is that equities looked relatively richly valued back in january could we now know it was the pandemic, so that cycle is over, and a new cycle has now begun. Francine we are just getting breaking news out of opec, stephen. This is in terms of compliance. Outlook i 80 may of the big concerns is whether we see deflationary pressure worldwide. We saw some discouraging data out of china, but that is probably due to the price of oil. How does the price of oil factor into all of your thinking . Stephen we think the price of oil works his way gradually higher from here, and that is a simple reason the overwhelming interest of producers. However you get there, you are going to see greater compliance, and the oil prices is going to get to the 35, 40, almost sustainable basis. If that happens, it would be a daysthe front pages for and days. Somehow, the coronavirus has put it out of peoples attention. Negativegain shortly overnight in the united states, just extraordinary. But the impact, when you get the oil prices, it penalizes producers, and therefore they take production outcome and that, in turn, remedies supply return balance. So we think opec will work its way higher from here, and the other elements of that argument, we think of the u. S. Dollar, is a little overvalued, somewhat overvalued. We have already seen a little bit of weakness recently. If the u. S. Dollar works his way lower over the next year, yearandahalf, Commodity Prices will move the other way. Francine stephen, thank you so much mad as always, stephen macklowsmith, jp morgan Market Strategist at asset management. Coming up, football fans rejoice over the return of englands premier league, but at what cost . We will take a look at how coronavirus has kicked to the beautiful game financially. This is bloomberg. This is bloomberg. Francine this is bloomberg surveillance. I am Francine Lacqua here in london. A bit of breaking news out of germany, the German Cabinet sent off an extensive debt to finance stimulus. This gives us a sense of what is to come, so we are expecting some news out of italy, and that is of course all coming out now. This is what we are looking at in the markets. The market is definitely focused in on what we heard from beijing. The market is definitely focused on some of these infection concerns, that they have decided to focus on what we heard from coronavirus. So coming up, the u. K. Heading for yield curve control. We will discuss that with the bank of england and what they can do to support the economy when it meets tomorrow. So we will have a lot more on that. The stock urging higher in europe. This is what i want to look at. There are a couple of things out there really important. Asian equities did see their most lackluster session except for shares in south korea, which were pretty volatile in the wake of rising tensions with north korea. An, forean you example, really captured our attention today, crude snapping two days of gains. To beautiful game returns us, this evening, of course talking about football, or soccer, for our american friends, deepening and where you are, will be played before empty stadiums to prevent the spread of coronavirus, and for the first time, they will be available without a prescription. The leagues richard masters says that will return within a couple of months. ,ichard what it will look like my views on that will be shaped over what happens over the next three months and how we start next season. This season has been significantly impacted by covid. We are hopeful that next season will be less impacted by covid, from an organizational and a perspective, but obviously, we do not know the cause of the virus. Francine for more on all of this, david, bloombergs business advisor. You follow football. Football is back. Lost scholarship revenue but also broadcast rebate. David yeah, hi, francine. The clubs have lost about 50 Million Pounds each, according to an estimate. About 500 million has gone for good possibly, and about 500 million is deemed deferred into the next year, because, obviously come up you have just football, months of and all of that revenue, hopefully they will get some of that back, but it is going to be deferred. How has the mix of broadcasting outlets actually changed . David well, in this period, it remains to be seen. It has changed dramatically. So what the football authorities have done in conjunction with the government as they have released a number of metrics, so publicsector broadcaster, bbc, as broadcasting matches for the first time ever. It is a sort of package. Releasing a lot of their games to free channels. Francine so one of the big issues that still needs to be decided, liverpool, for example, have nearly won the league. Liverpool will almost certainly win the league in the next few days. Complete,e fate a almost, because there have been some very interesting issues in terms of competition but also as to who the clubs are, joining league nexts season. And also the division, three cups will be relegated. That is a really expensive problem, especially at the moment. Francine david, how much reaction will go back for a lot more questions, including things such as, you know, what the lack of clouds mean for football. David hellier, Bloomberg Business reporter. Coming up, we will discuss what the bank of england will do to discuss the economy when it meets tomorrow. That is coming up shortly. This is bloomberg. You say that customers make their own rules. Lets talk data. Only Xfinity Mobile lets you switch up your wireless data whenever. I accept 5g everybodys talking about it. How do i get it . Everyone gets 5g with our new data options at no extra cost. Thats good. Next item corner offices for everyone. Just have to make more corners in this building. Chad . Your wireless your rules. Only with Xfinity Mobile. Now thats simple easy awesome. Switch and save up to 400 a year on your wireless bill. Plus get 200 off a new Samsung Galaxy s20 ultra. Francine economics, finance, politics. This is bloomberg surveillance. Lets get to first word news with dani burger. Dani china is escalating virus measures in beijing, closing schools and shutting food markets as it struggles to hold a new outbreak that has spread to neighboring provinces. Residential compounds in highrisk areas have been closed to visitors, and only those who test negative can leave the city. Visits in and out of the capital have been canceled. The u. S. Economy has a long way to go. That is the message from jerome powell, who gave it while testifying before the Senate Banking committee. Saidenate banking she there would be a period of significant improvement, but it would probably leave the labor market short of levels seen before the pandemic. Germany is hitting the bond market again. The country is selling its second round of debt in days after drawing over 31 billion euros of orders for 30 year bonds last week. It is offering 5 billion euros of its edge mark bund today, the the northn as korea says it will deploy troops into areas outside the demilitarized zone, further escalating tensions with its neighbor a day after the state destroyed a Liaison Office the countrys share. South korea has taken a strong tone against pyongyang, warning it will pay for any military action. Global news 24 hours a day, on air and at quicktake by bloomberg, powered by more than 2700 journalists and analysts in i amthan 120 countries, dani burger. This is bloomberg. Francine . Francine lets focus on the u. K. , and Consumer Price growth slows to a quarter of the bank of england target in may with cpi coming in at 0. 5 . Centralbank is anticipated to expand on its qe program. Speculation is mounting that it could pose yield curve control in the coming months pioneered by the bank of japan. Joining us is chris southworth, the secretarygeneral of the International Chamber of commerce, u. K. When you look at what the u. K. Needs right now, what would you be asking the government . Chris i think we have to see this as not just an economic crisis, we are in a global transition, more digitized, greener, and more sustainable economy. I think the recovery needs to now really look at these areas of policy and integrate those into fill them in, if you like into the response. To do that, we need to strengthen the collegiate nature and how we are all working with government and government in reverse, not just with business but with unions, workers, the civil society, consumers. The only way we are going to recover and bounce back fab bounce back faster is if we are going to do this together. Francine but we need concrete solutions, chris. If you look at how you get people back to work, and this is at the end of the furlough scheme in many cases. What is the one thing you think will make a difference for Companies Looking to hire back or get back to work given the uncertainty . Chris trade is the number one price tory priority. Rely on tradee negotiations around the world. We rely on trade relations around the world. Relations get the right in china and the u. S. And the rest of the world. There is a lot of china rhetoric. We need to base decisions on fact and evidence. The second priority is i would like to see a lot more done to minimize redtape and bureaucratic burden that is hitting business in their trading arrangements, particularly on borders. We know there is a lot more customs and redtap