Package. The merger between psa and fiat in a move that could force more concessions from the auto giants a new designated driver. Replacing the head of vw brands as the automaker battles with unions over cost cutting plans saudi arabia will no longer cut Additional Oil they say demand is thriving. With we have no whatsoever for lack all of us in the whole World Oil Market have no stomach whatsoever for any type of laxityies. A warm welcome to street signs. European markets have been open about an hour now. It has already been a choppy session. We open in positive territory. Now the main benchmark is down 0. 4 yesterday, the main benchmark dropped 0. 3 what was remarkable was the fact we saw the final recession word enter the mix. Declaring the United States has officially entered a recession just as the nasdaq hit a new record high and raised all losses for 2020. Major difference for what we are seeing in Financial Markets and what we are seeing in the real economy. Begging the question are we seeing a disconnect or discounting mechanism that they are supposed to. Because they are pausing for breath kicking off today, well get that decision tomorrow take a look at individual markets, we have red across the board here in the italian market under performing cac 40 down 0. 6 dax is down about 0. 7. In the uk, the ftse 100 trading about half a percentage point lower. One sector in particular focus today is the french aero space sector despite the government unveiling a 15 billion euro plan to support the industry paris aims to safe jobs following a slow down to air travel due to coronavirus. Airbus down pretty sharp losses accelerating. Daso taking a hit down 4. 7 . Worth baring the context down in the value to the defensive names. Weve seen a sharp rally for these parts of the markets now that trade is reversing. The government is still ongoing following that major announcement you can see that happening beside me here in terms what weve heard so far with the headline number. Critically, the package provides support for the subcontractors for different types of the supply chain and the fragility of the eco system and this package is clearly trying to address the issue. The french government has declared the state of emergency for the early sector and europe will keep pace with china and the United States. Again, there is images from that press conference, which is ongoing. Well continue to bring you the latest detail around that package. Eu regulators have recognized concerns over the 50 billion merger between Fiat Chrysler and frances psa group raising the market share as a potential stumbling block. The deal could face investigation if the carmakers do not offer concessions this week we are seeing shares come under pressure fiat now down and psa down autosector is selling off sharply. This is compounding the Broader Market narrative sticking with the auto space, volkswagen announces her bert diess will step down he will retain his position as ceo of the broader vw group as the carmaker holds talks over the auto laborers over the impact of the cost cutting measures so it is interesting, he is with the group but no longer has responsibility for the core brands exactly what is going to happen now that is a blow to Herbert Diess. Even though hes selling that as a good stat that they will follow suit with cost cutting. What is in the past was like a week long power struggle which happened at volkswagen is still on the Supervisory Board wasnt really happy with the performance because of the problems with the new golf and ib 3 is having Software Problems that fell into the responsibility of Herbert Diess. Last thursday in a meeting of managers, he was allegedly accusing the head of the Supervisory Board to breach the law by leaking information to the press. That did not go down well to the board which had a subsequent emergency meeting on the same day but at that meeting, they were not ready to make any hard decisions. Yesterday, they had another hard meeting and decided that this is high time to replace Herbert Diess as the head of the core brand unit what does it mean for the company . Of course, there is an ongoing power struggle we do see Herbert Diess who was successful at volkswagen be really damaged we dont know how big the problems are with the Software Issue but a lot of the success Going Forward for volkswagen goes forward to get those problems solved. For now, we dont know how long this will last but he survived that back to you. A lot of different stake holders involved in this story lets bring in Daniel Morris from bnp paribas i thinks it fair to say, daniel, one of the biggest themes has been the big rotation into value after the defensive part of the market really led the rally off the march lows do you think this rotation has further to run the implication being should investors see the dip as a buying opportunity we do think it has a bit further to run if we look at the relative performance of value to growth, it changed pretty globally to the launch of qe we have even more so now, more qe environment we see that larger term dynamic changing in the short term, yields probably have higher to go tech stocks are vulnerable given valuations today given that longerterm trend to driven growth, we dont fundamentally see that changing. The other part of the debate here is the disconnect between the real Economic Data coming through continuing to paint a dire picture around the world and the fact that we have seen equity markets strongly with the s p erasing all losses for 2020. Is this just a case of markets discounting the future as they are supposed to and investors looking out to feel confident from an earnings perspective is that the justification here thats what youd like to believe but when you have violent swings in prices, when we see the violent swings we know that isntthe case. Given the markets and the rally extended even further. You either become more concerned or capitulate. We are in the more concerned camp even before, the market was more consistent with the modest drop in the early year at around 10 . With he still think there is going to be an earnings decline. The only way you square that circle is to accept higher valuations thats not a really good Investment Case to say long term to say valuations are high but thats not a problem we do think there is a risk where anticipating that earnings are not going to be able to support and ultimately equity prices are going to have to reflect that i have never heard a man or lady in your position come on and tell us we are not traders we are investors surely you have to look a little further out. This is about longer term fu fundamentals rather than the next trading season. Caller ultimately yes and no nonetheless if we are looking at those relative valuation or relative investment opportunities, which ones are the most attractive. Right now, looking at equities versus credit. Those are all the risk in equities as you do in credit if the economies disappoint but you have some down side protection that you have in equities. Not to suggest that the risk assets rise. Right now, there is a risk particularly if you look at the rallies youve seen in airlines, which is something we had anticipated. Nonetheless, some of the long term earnings remains challenged until we are much much close tort vaccine we keep in mind with the risk of revisiting seems a long ways away is still there. Daniel, isnt the attraction of equities over a long term period the fact that they are not manipulated. The fact is that there isnt another bank in the world isnt sovereign. So dominated by the Central Banks dominated by the real brand of the market most over sovereign bonds. Caller that is certainly a different allocation if you look at equities over sovereign bonds. Cant be particularly high for sovereign bonds. I agree with the analysis that you do have the Japanese Central bank i think right now, the concern is how far the market has gone in this mood where all news is good news. The risk that we still perceive that out there even with lockdowns easing keep that in mind well have social distancing in place for a while at least and you think about well what are the implications of that and how profitable can companies be if they can only serve a smaller percentage of customers and what is the Growth Outlook for earnings being able to make and youll not be able to get back to the level you were at before all of this started for quite a while and prices say we are already there. Daniel, let me turn it back to you you said we can question the effectiveness of the japanese market buying. Arent you as sick as i am of repackaged and i cant put in the noun here. Originally junk bonds were junk and now high yield bonds and now fallen angels. Arent you just sick of this repackaged stuff caller i think what we also need to keep in mind is that as economies restart, it is going to be much different than we had before you want to think about where are the markets that would best reflect the realities. Distorts that market and hinders the allocation of the capital that takes place that is one reason to view in the u. S. Where you had relatively less distortion but it is all relative at this point. You feel there might be slightly better reallocation than you had in europe. Looking at the proposal from the french government from the labor market support while very good from a societial view. All of those things where they try to make those allocations, where do you find the investment as opposed to what you say just has a new name on the tent thank you for sharing your in sights Senior Investment strategist from pnb par i ba. Why the resent market rebound took him by surprise businesses are starting to bounce back. But what if you could do better than that . Like adapt. Discover. Deliver, in new ways, to new customers. What if you could come back stronger . Faster. Better. At comcast business, we want to help you not just bounce back, but bounce forward. And now, with one of our best offers ever, were committed to helping you do just that. Get a powerful and reliable internet and voice solution for only 29. 95 a month for three months. Call or go online today. Welcome back to street signs. Lets get a check on wall street and how we are posed to open up. European markets have closed lower. We are looking at negative move. Dow looking to open about 300 points lower lets remember after this comes after another strong day for markets. S p 500 are racing its 2020 loss now positive for the year, nasdaq coming into a new record high all of this as economic world of Research Declared a recession for the United States. A lot to digest for where we go from here. Looking at the bond market seeing a robust risk off trade come through it is really being reflected across the Asset Classes looking at the 10year and 30year Asset Classes. 10 year around 0. 81 markets have performed well over the last three weeks or so the market valley has taken a long time. The famed investor told cnbc he under estimated the effects of easing on the market ive been humbled many times in many career the last three weeks certainly fits that category i had longterm concerns for the last few years because of easy money too much debt was being built up in the corporate sector when covid hit, i was pretty much of the view that there was a good chance the credit bubble had finally burst and the unwinding of that leverage would take years im still of that view over the long term. The cofounder of allocator which monitors Hedge Fund Performance and joins us now along with karen so hedge funds, they face pretty significant redem tons saw a pretty Strong Performance in april the best in a decade in some cases what does this mean for Hedge Fund Outlook moving forward. Could we see hedge funds come out of this in a better light . It is an exciting time for the Hedge Fund Industry. It has been years to compete with the equity markets. In particular, in the u. S. Weve seen strong numbers come out of the Hedge Fund Industry when markets sold off, today and in the last two or three years our clients are investors in hedge funds and other types of alternative funds and they use the platform and they have tools for analytics and reporting. At the moment, we are gathering the data for the Choice Awards this year, weve extended the reporting period to really capture whats happenened more recently in markets. For all the funds we attract, we have seen them down about 1. 5 until may which compares very favorably and those global indices down 5 to 12 over the time period. The dispersion has been enormous for hedge funds. The top are up over 20 year to date certainly over the time period that we look at for investors Choice Awards just over a year most Hedge Fund Strategies are doing well and the funds are doing particularly well. Commodities are doing particularly well. Macro managers are all over the charts but on the whole, macro managers have done well and made the money. The only areas struggling are event driven and credit where theyve widened and have yet to contract to the levels that they were at at the start of march. Ryan, im glad you brought that up. In the past when weve spoken about rewards, there have been some outperformers there have been oil strategies perform and others surprised by take overs when you talk about 127 of best performers, which strategies were those the audio is cutting out a little bit but in terms of the macro side and what strategies perform best, it has been differentiated trades. They that did best managed to buy volatility at low levels and managers that in the commodity industry, there has been big moves. In oil and gold and other Asset Classes including the ags and if managers have been on the right side of that, theyve done very well on a directional basis. Managers in the macro space have done particularly well Interest Rates and exchange not necessarily in equities where volatilities are a little more expensive. Ryan, there was some admissions from the major hedge funds. They didnt know how to trade a pandemic others have been a little too cautious as theyve seen markets up in the risk of infections looking at some of the big funds how they fair compared to bigger dynamic funds. There have been some disappointments. Larger funds didnt cut positions enough overall, the larger hedge funds have done well if we look at the best performing large hedge funds did slightly worse than the smallest hedge funds. That crowds the picture a little bit. It is hard to pick the best performing smaller funds if we track the data bigger funds have outperformed smaller funds because we have the higher equity bias which has done well over at least the last 12 months. Theyve done well and seen more as assets flow into those thank you very much coming up on the show, bp is to cut 15 of its work force of about 10,000 jobs. Well be live outside the london headquarters when we return on street signs. Welcome back to street signs. Im Julianna Tatelbaum these are your headlines european equities accelerate losses as imports and exports mark their worst decline as investors shift focus to the fed meeting. On the defensive, french aero space stocks saying they must focus on saving jobs translator providing massive support. I realize all aero Space Companies are facing challenges but employment has to remain the First Priority of the industry the merger between psa and fiat hits a bump in the roads as regulators now combine in a move that could force more concessions from the auto giants President Trump says he will not Defund Police as house cats propose as thousands visit George Floyds casket ahead of his funeral. It has been quite a morning for european markets lets look where we stand about 1. 5 hours into the trading session. Losses accelerated and looking at the loss of nearly 2 over in italy for the ftse mib we are seeing a fairly stark trend here investors are selling the more value oriented parts and putting value into work a very robust trade coming together as investors take stock of where we go from here and how much good news already priced in germany is focused on the data front. We got german trade data in exports in april suffering the biggest collapse in 30 years as they went into lockdown exports fell while imports up by 16. 5 . The dax down 1. 8 seeing particularly hard selling in auto space and banks overall down a staggering 4 after the small rally weve seen World Health Organization has warned that the coronavirus is far from over as global cases continue to climb. More than 136,000 infections were reported globally over the weekend mostly Central America and south asia w. H. O. Says the virus has not yet peaked it represents countries around the world now focus on containing the virus and preventing the second wave of infections french aero space firms showing slightly lower package includes aid for medium size suppliers as paris aims to save jobs following a slow down in travel. Those talks over the plan are ongoing. The philosophy behind the plan is to show massive support and do everything behind the contrasted employment has to remain the Fi