Course in america we go into the jobs report next thursday because of independence day, a week from today. Is viruserica, it front and center. I would agree with you, europe is a different tapestry this morning. Francine it certainly is. Watch out for germany because it seems the overall number of infections rose, but there are pockets where it is researching. Lets get to first word news in new york city with ritika gupta. Ritika good morning. The u. S. Has not seen a day like this since the coronavirus pandemic hit. The country registered its biggest ever jump in cases, and that is leading some governors to reopen their states. To pause reopening their states. Texas has suspended elective surgeries in big cities. Businesses that are already open and operate. There are reduced occupancy limits. The administration has asked filed a brief with the Court Last Night that urges the entire Affordable Care act must fall, including its protections for people with preexisting conditions. The Supreme Court is set to hear the case from around the time of the november election. The Federal Reserve is playing it cautious when it comes to the biggest bank in the u. S. They have told the bank cannot increase dividend buybacks through at least the fourth quarter. A separate review of the effects of the coronavirus pandemic uncovered potential risks. Germany is preparing to strike back against possible u. S. Sanctions if President Trump follows through on his threat to kill off the nord stream 2 gas pipeline with additional penalties. The pipeline allows russian gas to be pumped directly to germany. Global news 24 hours a day, on air and at quicktake by bloomberg, powered by more than 2700 journalists and analysts in im than 120 countries, ritika gupta. This is bloomberg. Francine . Tom . Tom equities, bonds, currencies, commodities. I will keep this short. We are in a range bound market. What i am looking at, indicators the range oft of the two year yield. It is stock at. 18, plus or minus. Right now futures a little light. Francine . Francine tom, im looking at some of the markets here. Netherlands,pe support for airlines. We will be speaking with a chief executive on that shortly. German infections rates declined, and in all there seems to be more optimism that policymakers will not have to reverse plans to reopen after lockdown, after new cases rise. Inre is a bit of optimism europe this morning. Tom very good. It is a joy to begin this friday for me with a gentleman who flagships the great romance, klm of the netherlands. Anis an airline, it has agreement of 14 here, 14 there with air france. But klm is the romance of intercontinental travel of the past. It is not batavia of the 1920s, not even the transatlantic flights i remember as a kid. What it is is klm fighting for its life. There chief executive officer joins us now. Peter, thank you so much for joining bloomberg surveillance. What do you need to do on this friday and through the weekend, and into july, to right the ship before the Airline Industry implodes . Facing aviation history and in the last 100 years, the largest crisis we are facing. With that, we are taking every measure to sail the ship through the storm. Interesting isd the politics of ownership by the nation of france and by the nation of then evelyns fine. Of the netherlands fine. Are the governments with you . Today theh, i think state announced their support of klm by means of a direct loan and a credit facility, totaling 3. 4 billion euros. That is following statements by the french government in supporting air france. It is important for us at klm that we have that loan to start to have necessary restructuring and ensuring that we will drive through and be able to recover our network and start rebuilding after this covid crisis. Francine do you worry that there is a level of mistrust between the countries . The way it is working, as far as i understand it, is that both countries basically give aid separately and that there is a state agent that is checking whether there is dutch government money that flows to klm and not air france. Peter the situation of course, consolidation, which is very different than the consolidation in the u. S. , by definition means that the countries are supporting within the framework of the European Commission, are supporting their carriers with loans. Since countries have to defend to the public, if you wish, the good spending of taxpayers money in terms of providing a loan, it is natural that they want to ensure that this loan is directly into the airline they want to support and that the conditions are attached to that. So we have conditions from the dutch government and air france and conditions from the french government. Francine i understand that, but does it create a level of unrest in the franco Dutch Company . Do you worry that there is a element of distrust about what air france will do with the money . Peter i would say on the contrary, i think it is important for us and we have demonstrated over the last decade that the strength of the Air France Klm group is in the combination of the two brands, air france and klm, that we run a successful strategy, that also across the atlantic that we have a wonderful and strong cooperation with our friends from delta. Today going through this crisis, the fact that both airlines are supported by their governments, i would say is strengthening, rather than increasing the level of distress. I would say it is a positive step. Elbers, as you look at the Airline Business running up against the virus, fromou fly with confidence klm flight 662, from george bush up a flight to houston, from george bushs flight to houston, jam sedan . Peter we are taking every measure we can to make flying as safe as possible. A combination of having the masks on board as mandatory, having reduced services in order to minimize the interference crews and passengers, and to have assistance on board the aircraft to make sure that the ventilation is being filtered, and with that we have taken every possible measure to make it as safe as possible in terms of flying. Fromine we keep hearing he is pretty mad about some of the bailout deals, and he is saying it is a poor deal for a trading nation and it is really bad for competition. How do you respond to that . Peter understand that he says that, but that is precisely why the European Commission has established a framework, a clear framework, to ensure there is a level playing field, and we are paying interest on these loans, and these interests are to be endorsed by the European Commission. In order to ensure that this does not disturb the level playing field. Conditions in are the field of sustainability and Labor Conditions and other things like that. Byit is both the conditions the European Commission as well as the commission supply, but the national government. So it is not a free write. I understand it may serve his words to portray it as a free write, but it is not. Francine thank you so much for joining us today. He is peter elbers, klm chief executive officer. Coming up, we speak with rishi sunak, the chancellor of the exchequer. That interview coming up in 20 or 30 minutes, 5 30 am in new york, 10 30 in london, and this is bloomberg. Francine this is bloomberg surveillance. We are delighted to be joined by geraldine sundstrom. Thank you so much for joining us today. We saw a number of countries in europe i think australia yesterday, selling this 100 euro bonds and aunt went out with little success. How much more will we see these type of insurances that influence come to fruition. How much will it mean to yield . Geraldine in terms of issuance, we would like to see a lot of it because the governments are busy , helping the world in this crisis. Yields arese the very low and people are desperate for anything with positive yield. So i suspect that you have to go higher, longer, out on the curve to find those yields. However, there should be some caution around this. The amount of supply is relatively big, and uncertainty remains high. Be in curves,d to where we still get a positive yield without going so far out in the curve, like 100 years, and staying to the tenure part, and that means going to the United States over or australia to find relatively attractive yields. Francine i was looking at some by number, analyzed and it is pretty incredible. Do you see any value . I know you mentioned treasuries, but do you see value in some of the european bonds . Europe, i suppose if you look at, at least from my , you want diversifier something that will give you a relatively substantial Capital Gains if there were to be negative surprises ahead. And the european duration given the absolute level of yield, and because negative rates are limited in scope, we prefer to be more neutral, and maybe for those who can take a little risk, thanks to the support of the ecb may be having a little referral bond rather than changing such a long bond with low yield. Maybe what we sorry, tom. Tom no, please, continue. Geraldine the other question, and one would two given the amount of fiscal stimulus and monetary stimulus out there, not in the shortterm but in the medium term, inflation might come back. So going with such longduration is fraught with risk. If you really wanted to go so far out and so long, it would be safer to do it with inflation protected securities. Optimist, an geraldine, and based off the advice of pimco, i went out and bought the 97year austrian piece three years ago, and i have seen the year the yields come in as all yields have come in, and the price of that longduration bond has gone from 100 to 190 seven. I feel pretty good about that. But that underscores, if we get even a whisper of inflation, the price erosion that we will see in the bond market is the bond market ready for that . And listenerss ready for the bond price erosion we are going to see with any kind of reversal in yields . Geraldine for now we dont think inflation is going to run away. The crisis and the recession, of course keeping inflation low, and at least for the foreseeable future, Central Banks are going to make all the effort they can to control the yield curve. The question is up to which tenor, and there are areas of the curve that are more secure than others. It is relatively well priced i the market, and therefore you have to sort of balance priced by the market, and therefore you have to sort of balance the issuance with, for now, the lack of inflation and support from Central Banks. Compromise more around the 10 year rather than it going out to 100 because at this level of yield, uncertain horizon, probably take a lot of risk. Those horizons are interesting on this friday in the gym. Geraldine sundstrom with us from pimco. She will continue with us, and that is a good thing. Come up later on a friday, resetting into the second half of 2020. Ferro, delthan mohamed elerian. Tom good morning, everyone. Frommberg surveillance london, from new york. On a friday. Real heat here in new york, and headlines that the beaches of the united kingdom, even making a splash here in america. Geraldine sundstrom with this right now, making a splash in fixed income with pimco. We are thrilled that she can give us perspective on yield dynamics, and also moving over into the other Asset Classes as well. Geraldine, if Interest Rates dont work in a vacuum, they buttress off equities to an extent. But i would suggest far more flows of capital, and in the Foreign Exchange market as well. Tell me how you perceive a resilient u. S. Dollar from the purview of fixed income. Verydine so that is a good question. Even the low level of yield, we need to find other ways to diversify portfolio and protect would to the downside. So there are ways to do it. You can look at gold or you can look at foreignexchange. Certainly this is an environment gold, you know, we like and the dollar, you know, at least versus certain currencies, is likely to remain supported because of its reserve nature and safe haven nature. Thes true now that with pandemic being better in europe versus the u. S. , we might see a thele bit more trends on european part. But ultimately what it is what is going to dictate the currency that will be more resilient in the mediumterm is where the recovery is the most resilient, and that is a live bit early to tell. Francine what do you do with inflationary pressures, geraldine, longer term . I dont know whether they are twelvemonth away and whether we will even see inflationary pressures. But do you need to take stock of it now . Geraldine at least gradually, for sure. We dont think it is coming in the shortterm, and that is something for the mediumterm. So that is something we have gold. O start looking at of course, equities, the ones that are in the right part of the cyclicality, there is going to be a recovery. What day is hard to tell, but certainly what we have seen with our government, with a very large physical package, that are areas ted toward two digital and green. And these are the areas that are likely to be supported, and where you want to have equity risk and equity location there. I think it is about yielding a portfolio, a balanced act between caution but also conviction. I would say those areas of conviction is what i call cyclicality 2. 0, which is more toward digitalization, clean energy, and automation. This is what we like to bring up in portfolios. Youcine geraldine, how do look by region . Is europe less attractive than asia right now, or than the u. S. . Geraldine when you look at the sectors that i just mentioned, then we take an approach that ,oesnt have the regional bias with companies that have resilient Balance Sheets are exposed to the right sectors, the right cyclicality to point out. What we have the right cyclicality 2. 0. What we have found with those companies in the United States, in asia, and japan, in taiwan. There are a few in europe but they are more difficult to find. Usually the situation in europe, there is little tech exposure, but there are other things in automation. But if you handicap for the quality of Balance Sheets, we find it more difficult to find the appropriate candidate in europe. So defective in our portfolio, europe is carrying much more weight than japan or the United States. Tom geraldine, thank you so much. Geraldine sundstrom from pimco, with a friday brief for you. We have much more coming up. Mohamed elerian will join Jonathan Ferro at 9 00 in the United States. Will be joining us from Johns Hopkins university. And the virus across the sun belt of america. Stay with us. This is bloomberg. Save hundreds on your wireless bill without even leaving your house. Just keep your phone and switch to xfinity mobile. You can get it by ordering a free sim card online. Once you activate, youll only have to pay for the data you need starting at just 15 a month. There are no term contracts, no activation fees, and no credit check on the first two lines. Get a 50 prepaid card when you switch. Its the most reliable wireless network. And it could save you hundreds. Xfinity mobile. Tom welcome to bloomberg surveillance. Coming up, a conversation of Francine Lacqua with the chancellor of the exchequer it is an exceptionally timely interview, not only on the virus, the internal the internal policy of the united kingdom, but also the internal politics of the united kingdom, but also brexit. The chancellor of the exchequer coming up in moments. Right now, the chancellor of medicine for bloomberg news, and that is only one person, john lower men joins us. He is truly our best and brightest at the brightest. Is only one question in america underscored by dr. Redfield yesterday of the cdc. What is the linkage of expanding cases to deaths three or four weeks down the road, whether it is deli in india, whether it is portugal, or whether it is houston, texas . Good morning, tom. I think you have to assume that in these cases it is a case of rain follows the plow, right . If people are getting sick, if we are seeing more cases, these cases tend to take about two or three weeks to play out. Obviously not everybody dies, but if you look at the percentage if you look at the numbers of cases as they rise, you know, two to three weeks down the road, you do tend to deaths risesr of as well. Cases rises asf well. Learnedcdotally, i yesterday of a family where the father got the virus, the mother got the virus, and the sun got the virus. The father lived, the mother died, and the 31yearold son died as well. , doin all of your research we grossly misjudged the effect of the virus on those under 60 years old . Cdc has actually revised a little bit there leastce on this, or at the estimations in this area. They had been saying that people over 65 are at increased risk. Now they say that as you get older, the risk increases. I think it is still the jury is still out. That is some evidence younger people are protected. There is no question that as you get older, as you get into the 60, 65yearold range, you are at higher risk. Part of that has to be because people at older ages have more underlying conditions. Higher rates of obesity, higher disease background lung that is going to make you more vulnerable to these complications. But there is no denying that there is a risk to people in their 30s, in their 40s, and i think any people misjudge that. Francine good morning from london. We talk about this initially being a respiratory disease, but now every day we hear about other factors associated with it. It is blood clots, it is early heart attacks, things like that. How much do we actually understand what the disease is and how it is morphing . Well, we talked not too itgo about the effects is a hugely important finding because it underscored the disruption that the virus brings to the bodys immune system. That the immune system is flailing around trying to fight this virus, doing everything within its power to kill the virus, and a lot of these weapons of the immune system get misplaced, and that is why you end up with clotting, you end up with some organ damage in some patients. Actually, overnight we had a story that delineated some of the e