Best month on record in may, but brent and wti move lower in early trade. Amid talk, opec and allies will bring forward to the meeting this thursday. The uk government defending its decision to ease lockdown restrictions as more shops and primary schools reopen today, while the track and Trace Program is due to begin. A very warm welcome to street signs, everybody. Lets get into the top story of the morning. Protests around the u. S. Over the death of george floyd continue as increasingly volatile tensions between demonstrators and police leave many state capitals engulfed in violence. The issue has sparked a Global Movement as residents in london and berlin took to the streets in a show of solidarity. Well go live to minneapolis with our nbc news colleague jay gray to see the scenes on the ground later in this show. So, do stay tuned for that in the meantime, let me bring you fresh data coming out of europe this morning we have final may manufacturing pmis this is for the eurozone as a whole. Weve had the individual metrics come through now for the region overall the number has come in at 39. 4, just a touch below the flash estimate of 39. 5. Similar to what we saw the manufacturing output 35. 6, marginally better than the flash numbers and overall worth mentioning, this is a bounce off what we saw in april but slightly worse than the flash metrics had indicated. But now investors, analysts are thinking the worst may be over for eurozone factories we also got fresh data out of china overnight. Chinese factory activity unexpectedly returned to growth in may as an easing of Strict Lockdown measures eased demand. Manufacturing pmi rose to 50. 7 and up from 49. 4 in april. Sam joins us with more on this data sam, so at the headline level, this looks fairly encouraging in terms of the chinese recovery given were back in expansion territory but when you peel back the layers, is this as encouraging as it might seem as first glance good morning to you, julianna at first glance, this reading is the highest level weave seen since january. Theyre saying the expansion is really down to an increase in production as companies go back to work, but also factories come back online after a sluggish few months perhaps dealing with some back orders there the National Bureau of statistics have said that over 80 of factories have actually reached more than 80 of normal production prior to the coronavirus outbreak actually, the official manufacturing pmi came in at 50. 6 in may. Slightly slower than in april, which was 50. 8, but as you say, we really do need to look beyond the headline numbers that is because the survey cautions demand remains weak, particularly when it comes to export orders. The official data actually showed us export orders contracted for the fifth month in a row in may coming in at 35. 3 so, far below that 50 mark that really indicates to us the difficulties china is having in getting things back to usual, particularly as the pandemic takes a hefty toll on global demapped weve seen chinese manufacturers struggle to get the overseas orders, which have been either reduced or completely canceled away from factory activity, though, were seeing encouraging signs which shows us theres a bit of an uneven recovery in the worlds second biggest economy so the official data around the no nonmanufacturing sector in may showed Us Consumer Confidence may be coming back the Service Sector, which is a big generator of jobs, that expanded in may. Officials are saying thats because of the consumer policy measures that have been introduced to spur consumption but also because of the may holiday we saw at the beginning of the month, which took place just after chinese officials had sort of loosened restrictions on Domestic Travel and quarantine so, after that, economists are seeing or expecting to see, perhaps, Migrant Workers who would go back to work in factories, perhaps looking for other work in logistics and things like catering as we are seeing that uptick in the Service Sector now, the Construction Industry also picked up in may and economists are expecting to see more of a dependence on the domestic marking moving forward in the short term as clooerly Global Demand remains sluggish back to you. Thank you so much for breaking it down for us and bringing us that granularity lets bring in Mike Gallagher from continuum economics jeff will join the conversation. Thank you for being with us. I always fine these pmi days interesting because they remind us how connected the Global Economy is we were just discussing the chinese pmi that came through overnight. It seems to be painting a stark picture of the consumer domestic side of the chinese economy and then the exportdriven side and what the data has shown us is new export orders continue to be weighed down because of the restrictions in place in its trading partners in europe and the United States. But pair that with what we heard from the chinese premier last week, all of the attention on the jobs market, increasing income to spur consumption the consumer side of things in china steams be Getting Better whats your take on how the chinese recovery is going . Its very much a twospeed recovery, as youre emphasizing. The production bounce back was sort of vigorous and were almost getting back to normal now. The issue is obviously the global recession, which is causing sort of headwinds for chinese exporters. If you look at the consumer, which is potentially much more interesting, there youve got different behavior if you look at car sales in china, they rebounded very vigorously but if you actually look at things that involve social interaction, restaurants and other activities, then the trend has been more cautious which reflects, i think, residual anxiety about covid rather than an ability to spend in the chinese case i think we will see further policy stimulus as has been quite widely signaled last week. Thats the kind of picture youre painting, the different sides to the Chinese Consumer recovery seems to me it bodes well for European Companies what do you make of european markets at the moment, what theyre pricing in and whether you think that this is a good time for investors to be looking at european markets. So, i think theres some positive news in terms of euro and im referring to Continental Europe rather than the uk. If you look at the trajectory of covid in all of the major xhiz, then weve quite clearly seen a significant downtrend. Theres unlikely to be a major second outbreak in the summer compared to some other countries where we are concerned and i think that actually is positive for the european story. It will see confidence rebuild and i think also you do have policy action coming through youve got the ecb bond buying, and theyre going to use 120 billion out of 750 billion but we think theyll top that up with 250 billion and do another 250 billion in december. Youve gottened progress and i think in the june 19th eu summit, well see an in principle agreement to push toward with the plan for 750 billion stimulus package, 2021 to 2024. That all helps european equities have lagged somewhat, but i think the sweet spot is more german equities, which can benefit not only from the asian recovery but also the european recovery, whereas italy and spain will still have a transition because tourism is such an important part of their economies. Those inevitably will lag. Mike, i just wanted to pick up on the other risks that youve painted rosy as liquidity. To revert back to where julianna came in, which is the u. S. chinese relationship, it seems to be emboldened by the fact that trump didnt talk about another trade war with china but theres plenty there suggesting this decoupling with china and the chinese economy is set to continue. It markets continue to ignore that i dont think they can ignore it, jeff i think they do need to pay close attention to it because i think inevitably at some stage well see some u. S. Action but i think the takeaway from friday was that the action is not imminent from the u. S. Side, so that caused a sigh of relief as far as hong kong is concerned. I think the u. S. Will take action at some stage but it will be stepwise. The wider u. S. china relationship, yes, theres a bit of an ongoing deterioration but ultimately trump wants to make sure he doesnt derail the phase one deal, because thats kind of important to him in helping the economy prior to the election. Theres only so far he will actually go. And its also worth remembering for trump personally, as distinct from the wider administration, china is just a deflection tool. Hes trying to deflect attention from the covid handling by attacking china, by attacking obama, by attacking the w. H. O. , by attacking twitter so, thats all part of a wider political strategy of deflection on the part of trump mike, just to focus on the actions of the fed here for a moment, we have seen the fed engage in purchasing in the highyield market, but so far theyve rejected the idea of going into the equity markets. But i think there are questions as to what will be available for the Federal Reserve to buy to legitimize any qe action do you think they may change their mind on equities at some point or will they continue to be a bit wary . I think they will be a bit wary if you look at the construction of the bond buying, theyve actually got some u. S. Treasury money that is there to actually act as a loss just in case theres problems they would need an even bigger pool in terms of equities. To be honest, jeff, i think the critical thing for the u. S. Government is actually Government Bond buying because thats helping to effectively fund the budget deficit this year theres a big problem next year in that the budget deficit in the u. S. Is going to be around 2. 5 trillion i think the big news over the summer will be the fed decision in terms of qe not for market functioning but to actually support the recovery we might get that in july. We might get that in september were certainly looking for hints on june 10th theres two options, either openended qe or qe with yield curve control. Qe with yield curve control, is what the japanese have done and would mean sustainably lower treasuries, even from here that would mean treasury yields down to around 0. 4, 0. 5 for tenyear yields. Thats kind of quite crucial we dont think theyll use that because theres problems with that policy. We think theyll, instead, look at continuing purchases around 80 billion a month through 2021. Mike, thank you so much for joining us this morning. Appreciate your time Mike Gallagher, continuum economics. Jeff, thank you as well. Chinese state media has hit back at u. S. Threats over beijings new laws in hong kong saying the move will, quote, not bring china down President Trump has vowed to curb hong kongs special customs and travel status and impose new sanctions on unnamed individuals. The tensions come as fresh antigovernment protests are expected to break out in the city in the coming weeks the number of confirmed coronavirus cases has topped 6 million globally, according to Johns Hopkins university over 370,000 people have died worldwide due to the virus with the u. S. As the worst effected brazil has seen a spike in recent weeks with over 500,000 cases. Coming up on street signs, the skies clear for lufthansas bailout plan as they agree a deal with the European Commission we have details after the break. Welcome back to street signs, everybody. Lets get you a look at european markets, how were opening up the new week, the new month here we have some green across the board. The spanish index is leading the way higher, up about 1. 3 . Ftse 100 up 60 basis points. Bear am nind mind, we have several markets closed, including germany. We have looking for gains for french and italian markets we saw the stoxx 600 gain 3 last week, marking the fourth positive week in a row that comes despite a pullback on friday there was a lot of nervousness heading into President Trumps News Conference about what kind of action he would take against beijing with regards to their action against hong kong or toward hong kong the fact that President Trump did not go so far as putting the phase one trade deal in jeopardy seems to be providing a relief to investors and investors here in europe shrugging off, so far anyway, the social unrest, the protests taking place across america in response to George Floyds death. Lets push on and take a look at airlines a couple in particular that are trading very strongly this morning. We have ryanair shares up 2. 4 , easyjet up 3. 4 . Niece airlines extending recent gains. We have news on lufthansa. The german airliner has agreed to more favorable terms with the European Commissioner over its 9 billion state bailout meaning it will only give up 24 runway slots to other airlines, far demanded offered by brussels the deal will be the biggest european bailout since the crisis began with the German Government set to take a 20 stake in the struggling airline. I mentioned these two, the german markets are closed today but were seeing a boost for airlines more generally. On top of this lufthansa news, investors continuing to price in the reopening of tourism across europe this summer as europeans get ready and hope they can move across the continent and take their Summer Holiday in some form that resembles what were used to. Lets take a look at the auto space french car registrations more than halved in may with psa falling 56 over the month registrations for renault fell more than 50 in may last week the french government unveiled its 8 billion euro rescue plan for the embattled car industry but still facing supply chain disruptions and thousands of job cuts. A lot of different factors to take into effect psa Group Trading off the highs of the day but still up 2. 7 the suppliers, earlier this more than michelin was trading in positive territory but we have given up those gains and that stock is down 0. 3 i want to take you to the health care sector. Santafi has stopped hydroxychloroquine and will no longer recommend the drug as a treatment, which comes as the World Health Organization halts its own trials after a study found patients trade with hydroxychloroquine had a higher mortality risk than those who didnt take it a spokesperson said the halt is temporary and decisions to resume are pending reassurances of safety. The news comes after a month about a month after u. S. President donald trump announced he was taking hydroxychloroquine daily to prevent contracting coronavirus. So, santafi shares are up 1. 2 . Pharma group kenra will deliver avifavir to german hospitals. They say its more than 80 effective treating 35ish9s with coronavirus. The ceo of the Russian Direct Investment Fund told cnbc that sovereign wealth funds may have to pitch in during the crisis. Weve shown sovereign wealth funds can be effective and being focused on fighting key challenges actual government is very supportive and we also see major effort by other sovereign wealth funds to invest in health care and invest in other efforts. Some sovereign funds will need to share their riches, but this is a good thing because it actually builds them up by Good Investments in previous years. Opec and allies are considering whether to move their next meeting forward to this thursday, june 4th. Algeria proposed the change saying it would help facilitate oil sales. Russia does not object to the new date, according to rueter sources. Saudi arabia is reportedly hoping to persuade moscow to extend the record round of output cuts until the end of 2020 i want to take you to brent to the endofmonth chart trading at 37. 58 a barrel were seeing Oil Prices Bounce off the historic lows last month. They were top performer, the oil price across different asset class during may wti posting its best month ever. Wti, if with he can show you the monthly chart of wti we have that Oil Indicator up more than 85 . Were trading at about 35 a barrel i want to bring steve in, who knows far more about opec and its allies than i do whats your take on this news that opec plus could bring forward its meeting date to this week and whats important to watch when we look at that meeting . Im not too worried with the meeting is on the 4th of june or the 10th or 11th its what comes out of that meeting and the signaling as important as what happens. Lets remind ourselves for the months of may and june, opec plus, including the russians, agreed to take 7 Million Barrels off the table per day. The question is whether some of that oil comes back on the market in july if they have done a good job rebalancing or keep rolling on with that very, very large output cut through july, the rest of summer or towards the end of the year as well. The signaling is as important as physically what happens in terms of the barrels that return youve got to remember, and im pained to say this yet again, there are three parts to this equation the opec supplier, the supplier on the market, which they dont control, such as u. S. Shale, and the demand side. All three are important to get this fabled rebalancing in the market very clearly with the wti close we saw on the previous months expiry, you get this wrong and you could see violence to the downside opec and their allies are aware of that. They have a degree of stability, at least 20 below where they would like to see the price. Quite frankly, they would like to see 60 plus, and even then many individual treasuries do not balance the books for these countries as well. If they can get stability first through some form of rebalancing and the