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Lets get your headlines for you. Beijing cansles flights and orders schools to close as chinese cases of the coronavirus rise. Infections. New jay powell said the fed will use all tools to defend the economy. Robert caplain said healthcare policies are key to recovery. Indias defense stocks gain after the first deadly clash with china. The first clash resulting in death between the two countries in 45 years. Now we have e. U. Car sales coming out and the drop is substantial as you may expect. 57 is the european car sales drop in may. This comes after the much bigger plunge of 78 in april. Car sales falling by more than half. 57 in may after the 78 plunge in april. Of course that is not unexpected considering the fact that most of the month at least Car Dealerships were closed in many countries in the European Union. Just under an hour away from the start of cash equity trading in europe. Lets take a look at futures this morning. As we said, a little bit of a pause in the risk rally. Tse futures are up a little. Dak futures are down a little. Very little change in futures as investors weigh on the one hand, out of the arriving indianchina border as well as the problems in korea and on the other hand accelerating Economic Data points in the u. S. Like retail sales. Take a look at u. S. Futures after yesterday. We saw the s p 500, the dow and the nasdaq all rise about 2 . You can see futures there taking a pause as well. Very little change on the bigger major indexes. Anna . Anna interesting to look at what is going on. Talk about how the futures have all of these conflicting pieces that is th and reflected. We have concerned around a second wave and geopolitical tensions as you mentioned in various locations, predominantly in asia and worth a mention. Contrast that with some of the more positive data were getting from parts of the economy. In the u. S. , sealts sales yesterday. Car sales for europe, in the u. K. , inflation slowing to half a percent matching the median estimates. Hat is pretty much expected. Onflicting crosswinds around geoconflicts. Yesterday Jerome Powell was talking took into account extent to which the u. S. Economy had ottomed out. Well from him again. Wall street making decent gains on the back of some of that data. Lets get to bloomberg first word news. The u. S. Economy still has a long way to go. That is the message Jerome Powell gave while testifying before the Banking Committee and said they are likely to see a period of significant improvement but leave the markets well short of the levels seen before the pandemic. The first state was the shutdown. That produced very sharp declines in Economic Activity. That was q 2. We may be reaching the bottom of that now. Anna china is escalating its virus containment measures in beijing closing all schools and shutting food markets as iting struggles to halt a new outbreak that has already spread to provinces. Only residents who test negative can leave the city. German chancellor Angela Merkel does not expect the e. U. To agree on the Recovery Plan until july. The Program Needs to win the backing of of everybody. Leaders debate the plan for the first time at the summit on friday. Global news 24 hours a day on airpowered by more than 2700 journalists and analysts in more than 120 countries. Matt . Matt asian stocks drifting a little bit today along with european and u. S. Futures. Looking for a sense of direction with encouraging signs of Economic Data out of the u. S. Sales, stimulus. Increases in coronavirus cases. The possibility of a second wave in places like texas, florida and maybe most importantly beijing. Ining us now is a guest from our team in europe. What do you think investors need to see to go one way or the other . You know, matt, i think the second wave of fears are coming to fruition and that is very worrying. Investors are probably looking once again for more signals from policy makers that they have their backs. This is the reality that we live in today, that investors every time they see something wrong with the markets, the first thing is looking at policy makers and the question what are you going to do now . The unintended effect of this wall of unprecedented stimulus from the fed and other Central Banks in this period where they are coming in to rescue the markets and rescue investors. That is effect sweerg. Once we see a little bit of a pullback, the first instecked in markets is to ask what can Central Banks do for me now . Anna some of the data has been impressive. Maybe that is not the right word. Maybe we should expect a big bounceback in retail sales as the u. S. Economy opens up. Retail sales in the u. S. Have a momentum even if the data was in a really big hole. That hole is not as big of a hole as it was though. Absolutely, anna. What we are seeing here is evidence of pentup demand among consumers. The fact that they have been locked up for months and months definitely helps create a bigger buildup. Now that they have been able to go out a little bit to the shops. They have been locked down last few months. Now that were seeing a little bit of reopening it is encourage to go see that pentup demand is still there. The question is how will this square up against fact that we are seeing signs of a second wave and we are seeing the possibility of lockdowns being reinstated or at least reopenings being scaled back. You have to wonder what that ill do to this pentup demand. The question would be would a reinstatement of lockdown or scaling back of roping kill the demand that were seeing . Matt todays question is whether l brexit rock the world once more . Is anybody going to care about brexit again . Is it really going to be an issue . It is very difficult for investors to make brexit a big deal given that we have seen so many versions of this movie. The brexit sequel lab flop because we have seen time and time again the cycle of the process coming to a head and then the negotiationors coming to some kind of agreement last minute so you could see that investors might be a little bit complacent because were hardly seeing any hedging around the deadlines here. It is not going to be something that rocks investors worlds but in conjunction fears of a second wave and Central Banks are at full throttle in terms of their Monetary Policy abilities, were kind of in this conjunction of different risk factors. You have to wonder whether brexit might have a bigger effect on markets than it could have been because we have all of these other risk event s that arehappening simultaneously. Anna thank you very much for joining us. Coming up on the program, fed chairman Jerome Powell is giving a cautious assessment of the u. S. Recovery. More on that. Well have a kg about the trajectory, the path of recovery for the u. S. This is bloomberg. Anna welcome back to the European Market open. The asian equities have been way down. We see a little weakness in futures. Fed chair Jerome Powell said the u. S. Economy has a long way to go before it reverses the damage done by pandemic. Second wave concerns are giving some reason for caution. In the united states, florida reported record new infections. China is escalating containment measures in beijing. It grappled with how the stop a rowing outbreak. Thr than 1,200 flights have been canceled in and out of the Chinese Capital. I want to start with some of the economic backdrop to your strategy at the moment. At do you make of the latest data coming out of the u. S. Es g up in the right bouncing up in the right direction. How do you interpret it . Signs ofrst sivepbs the Consumer Sentiment helping to grapple out of this crisis is very encouraging. I mean, obviously matt do you expect that to continue . It is not exactly up to levels it is coming from obviously a very low base. It had to rise. It would be unbelievable if it didnt, right . No, absolutely. If you think about europe and think about shopping malls and what we have seen there. Shopping malls down 4070 . In junk back up. Minus 20, minus 30. I think the biggest difficulty today is untangling the difference we have seen the effects of lions being let out of the cage. People finally being free from lockdown, stuck seeing four walls. A realistic level of consumer behavior. Anna i wonder where that leaves us when we think about a second wave as well. Jerome powell said the u. S. Economy has bottomed out. One hopes that is case. If we do see a second wave, i guess to say the economy has bottom out, you have to make the asthauges the quality response in terms of lockdown is very different. E wont see large lockdowns. There has to be sunshine if you say we are through the worst of it economically. Absolutely. At this point, trying to make a call economically is challenging. That is why there is this alphabet soup in term ovs what financial shape the recovery we see. All sorts to have alpha bet have sited. T started off in mid may where i found his statement remarkable. The language he was usesing. Were not out of ammunition by a longshot. Have we ever heard of a central bank saying there is no limit to what we can do. Thats why i think on one hand it is very, very challenging to understand the path of recovery but on the other hand if you take a step back and think about what is going on right now, i mean, it is absolutely unprecedented. I mean, it is almost like Global Pandemic has hit us. Were all in the same shoe and you know, the leaders to have world have called in every super hero they can think of. We have batman and superman and wonder woman and ironman and essentially, you know, these guys are all put in a room flexing their muscles and they are being told do whatever you can, whatever it takes to sort this out. And in real life, what am i talking about . Im talking about uncharted territory. Essentially a Global Coordinators central bank efforts. The numbers were talking about are remarkable. 3 trillion of stimulus in the u. S. Over 1. 3 in europe. What were seeing on the fiscal stimulus sides is more important, especially for the shortterm. It is one thing telling Companies Start borrowing and start investing and telling households to stop saving money because of Monetary Policy but until they figure out how the solve holes in their cash flow, that is quite challenging. It really starts to move the needle. Matt does it concern you that some central bankers, for example when we hear from powell, there is so much uncertainty. There is really what seems to be a blind spot in the outlook. He seems to be throwing things at the wall to see what will stick. 5. 5 billion in e. T. F. Purchases and then starts buying the underlying Corporate Bonds really without any reason that we can discern. Is that worrying at all . I think there are two sides of the coin. On one hand, youre absolutely right and on one hand it signals a sense of panic. He is research referring to second half recovery if a second wave a second half recovery but in order to really recover, second wave needs to be contained. Obviously the vaccine need to be developed quickly and be accessible. On the other hand quite tim simply the reason he is being so outspoken and rapid in his statement is because he is essentially looking into the eye of his audience of asset allocated Fund Managers etc. And ying to them, guys, this greenspan put is still very much alive. I will we will continue to provide support which will allow you to allocate this and continue to invest into the market and have the story to tell your clients about why you doing so. I think it is more than just the u. S. What im particularly startled by is what is happening in europe. Think about the day the euro came about going back to 1999. Since then, the European Union has struggled to be on one page with regards to sort of the fiscal approach to things. The l know, since it was polarizeation between Eastern Europe and western europe has been enormous. Anna well pick up on that shortly. She stays with us on the program. Coming up, healthcare has posted gains in europe where other sectors have struggled but do those sectors offer the same opportunity . This is bloomberg. Anna welcome back to European Market open. European equities showing more signs of life than they were half an hour or so ago. We still have ho minutes to go until the start of the European Equity session. Three months into europes outbreak, is healthcare the best place to put your money . With that in mind, i want to ask you about stock issuance. We would normally as you point out, see a lot of Companies Issuing equity at this point. Some may be delayed by government support. Do you think well see a wave of new issuance coming through . We have seen some already. Absolutely. Here are two counts. Companies raising through a position of strength and companies raising through a position of weakness. If you think about running a business which is covid vulnerable, if you see the rate at which share prices have recovered, it is an fantastic opportunity to beef up your liquidity and be in a position where you can consolidate and go shopping and come out much stronger with a much greater market share after covid. You also see cash burning areas of the market with the biotech sector. A fantastic opportunity. A lot of share prices are making all time highs. Why not again increase the liquidity buffers. What i think is going to be an interesting moment as you say is sure, matt i think it is interesting. You asked the question which counterparty can be a reliable partner in a crisis in order to find real alpha. Where are you identifying opportunity . Yes, i think do your upon the earlier on, obviously health and tech has been amazing. How much longer can they run and to what extent do you need to look at areas to extract alpha . On the topic of healthcare, one would agree if we look back on this period, it has been a at he moment of innovation, digit alliesation. Thats why i think if you are in those domain areas that enormous amounts of Earnings Growth which we could see continue to support it. If you are a company which is proven to be a reliable counterparty in a moment of crisis then the very that the chance there is that client also keep you going. Matt thanks so much for joining us. You doing okay . Yeah. This moving thing never gets any easier. Well, xfinity makes moving super easy. I can transfer my internet and tv service in about a minute. Wow, that is easy. Almost as easy as having those guys help you move. We are those guys. Thats you . The truck adds 10 pounds. In the arms. Okay. Transfer your Service Online in a few easy steps. Now thats simple, easy, awesome. Transfer your service in minutes, making moving with xfinity a breeze. Visit xfinity. Com moving today. Anna welcome back to the uropean market open. Starting to look a little bit more positive. Lets take a look at what we are looking ahead to today. At 10 00 a. M. London time, well get the eurozone final c. P. I. Readings for may. They will be questioned about timulus proposals. That will be an interesting exchange. Opec publishes its monthly report and at 3 30 this afternoon well get the e. I. A. Weekly reports on u. S. Oil. Jerome powell delivers his Monetary Policy report to the Financial Services committee. That will be the second day that well hear extensively from Jerome Powell and Englands Premier League returns. Games will be played without spectators. Policy makers are expected to cut their key rate for an eighth straight meeting to a record low of 2. 25 . If youre not watching the football rkt you can watch the ian il jan brazil financial meeting. I felt strongly that after severe on contraction for the first couple of months, first half of this quarter, that we probably bottomed out in sometime in early may so we expect growth to continue to the end of this quarter and into the third and Fourth Quarter and i think the surprise in the jobs number as strong retail sales is part of that narrative. Were going to grow pretty strongly from here. Lets dig more into what you just said. Is this going to be perhaps a faster recovery than a lot of people have been looking for including people in the fed . Possible. There is Downside Risk to the recovery and upside. And a lot of which it is going to be in my view at this stage, is going to have throse do with monetary and fiscal policy and a lot more to do with how effectively we execute the healthcare policies. I know youre not a fan of negative rates. There was an opinion piece on bloomberg this week. They said you guys are making a mistake. That negative rates boost employment and help businesses and encourage lending to go up from banks and people can invest where they can make money. He said that by not doing this youre favoring banks over people. Whats wrong with this asht . My concern is that nfl when i look at the performance of negative rates outside the u. S. , for me at least, and i have studied it as carefully as i can, the jury is out as to how effective they have been and whether they have actually helped growth. In addition, there are side effects to negative rates. Negative impacts on the financial system, also we have a very large money Market Industry in this country and Many Companies Access Commercial paper which depends on a healthy Market Industry and my concern is negative rates may do more damage and have more side effects and it is not as clear to me what the benefits are. Ok. I want to ask you one more question about yields. You mentioned it could distort the markets. A lot of people are saying yeah. A steepening coifer. It could send everybody a message. You said that could happen. Why consider going for a policy hat is going to distort market signals that you yourself say are so important. As i have said im skeptical about yield curve control and at the moment i need to be convinced that the reasons for it, having said that, what about happen is we have got a substantial amount of Government Debt that needs to be issued. We had a substantial amount before this crisis. It has gotten exacerbated. As were in this crisis, while were still in it, if i saw some evidence that treasury yields were being strained because of the substantial amount of debt issuance, that would be one argument that would cause me to want to examine yield curve control. I dont see evidence of that now which is the reason why im skeptical but i want to be open inded. Tt that was fed president Robert Kaplan talking about negative interest rates. Lets talk about the geopolitical issues that are brewing around the world. Ties between china and india are being tested after a military standoff escalated into a deadly conflict for the first time in more than four decades. India confirmed 20 of its troops were killed along the contested himalayan board. China says there were casualties on both sides. It is unclear what triggered the clashes. A government reporter joins us on the phone. This is the worst outbreak of iolence along that out that border in four decades. What happened . It is not clear what started the clashes but by the time they were finished, there were dead soldiers on both sides. You have to understand this is happening high in the himalayas in subzero temperatures in very thin air at about 15,000 feet. We have Indian Officials telling us that the soldiers from both sides attacked each other with stones, iron rods and bamboo poles wrapped in barbed wire. There was an effort not to quire aweapon but it turned out to be just as deadly. Apparently the violence went for hours. It broke out monday afternoon and went until midnight. Anna has the Prime Minister in india said anything about this . No, there has been complete silence from the Prime Minister on this. There is a fair degree of knch about why he is not speaking out given the ramifications over the death of 20 indian soldiers and how this will play domesticically, particularly when the funerals start to happen and their families are interviewed. There is going to be a lot of grief here in india and people are very much waiting to hear what the Prime Minister has to say. Matt it does come at a difficult time for them. Are there any signs this could scalate further . Neither country gets anything from this escalating further. Jinping and Prime Minister modi both facing significant issues at home. Worsening virus epidemics in their countries. President xi is of course ealing with fallout from his worsening ties with the u. S. While moti is dealing with an conomy in crisis following months long lockdown here in an effort to droll virus. Neither can afford for it to escalate further. Anna thanks for the update. Up next, cruising for a bruising. Slumps in late trading. Well bring you the latest on the cruise story. That is next this is bloomberg. Anna welcome back to the European Market open. Still 15 minutes to go before the start over the European Equity trading day. Gradually making progress to the upside as we approach the european session. Lets get a first word news update for you. Here are todays top stories. The economy still has a long way ago in the united states. That is message from fed chair Jerome Powell. He said the economy is likely to see a period of significant improvements but it will probably leave the labor market well short of the levels seen before the pandemic. The shutdown, we saw what that would abuse which is very sharp declines in Economic Activity. That was q 2 and we may be reaching the bottom on that now. Anna china wasesque lathe virus containment measures in beijing closing all schools and shutting Food Marketing struggling to halt a new outbreak. Residential compounds in high risk areas have been closed to visitors and only residents who test negative can leave the city. Germany is selling a second of debt in days after 30year bonds last week. It is offering five billion today. The largest since january as the country increases the pace of its borrowing to fund a massive stimulus program. North korea says it will deploy troops on its side over the demill tarized zone. 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 by bloomberg powered by more than 2700 journalists and analysts in more than 120 countries. Matt . Matt you probably wont be going on a cruise with norwegian any time soon. They have extended their suspension of most trips until october. The move threatens a recovery among cruise stocks we had been seeing. They plunged in late trading yesterday. Joining us is our techities reporter. What is the story now with norwegian and what is the story with the industry at large . I think when you look at what they have done here, they suspended it to as you said until october. Really when you think about it, they werent probably expecting to have a great amount of revenue over the next few months simply because unlike other forms of hospitality or even the restaurant and some of the vacation you cant really socially distance on a cruise ship holiday. We know that the spread of the virus is much greater inside. Cruise shipping holidays, it is very much focused everybody in a smallish area and therefore the spread is high. Without a vaccine, therefore, i think they expected demand to be very low anyway. This is a way of cutting losses on costs and going through the summer months and saying there is no poincht in running point in running these operations. I think it is kind of expected from the industry. The recovery has been quite surprising. The recovery in the stocks. Though they remain around 60 for the year, there has been a bit of a bounce back which is unusual given that most analysts are expecting almost no revenue for the next few months for these companies. Anna thanks very much. Oe easton on the beleaguered cruise sector. We are seeing a little bit more green on the screen. A little bit of a bounce coming through on european futures. Up next well bring you the stock were watching. William hill. Well get details on that and other stocks were watching ahead of wednesdays start of cash trade. This is bloomberg. Anna welcome back to the European Market open. 10 minutes until start over the cash equities session for wednesday. The number of coronavirus cases in asia remains a concern. They are taking Health Issues seriously early on, has allowed countries to bounce back for quickly than some nations. Started with china. So the early covid was an issue last year and there has been a lot of learning with that. Culturely and economically there is differences. When you think china, four deaths which is the tragic but a shockingly low number given the amount of cross border travel Mainland China and the early exposure they had to people who might have been exposed to the illness. What you did see is before there was government policy, a caution around health. People wore masks in asia as a courtesy to others when they are sick. People in north america think it is a shield. It is for someone else you wear that. There is muscle memory from sars and the bird flu and things where cultures understand to take Health Issues seriously early and the other thing i think in the balance of economies, asia started with growth. Europe would have started with flatter, negative growth. You have more to work with economically but it is the same policy for these leaders. They are trading off income for health and Financial Inclusion and health inclusion. Singapore has been dramatic. It is referred to as the switzerland of asia which would imply a serious focus on their economy and they do and it is very well developed but you see they are one of the most conservative, one of the most healthcare centric of the governments in asia. They are quashes their health. That is why people trust the government. Thats why they are supportive. They see those tradeoffs being made and there is an alignment of people executing and the there are borders and they are defining travel, interasia, where if you look at the u. S. , interstate travel and the individual policies in states and cities and things were completely they were unaligned. New yorkers were not welcoming floridians. Those sorts of policies are addressed at a more National Level in asia. I think there is a cultural ,nderstanding of illnesses that again more developed for having dealt with other challenges. Matt prudential c. E. O. Mike wells talking about the coronavirus and the effects and response as well. Lets get to Bloomberg Business flash. Hsbc is reportedly revising its plan to cut jobs according to reuters, the london based bank will move ahead with the plan to cut 35,000 jobs worldwide. That had been put on hold by the coronavirus outbreak. Hsbc has more than 235,000 employees in total. British air ways parent i. A. Zpwmbings reviewing its strategy as the Group Emerges from the crisis. Ng with goldman sacs sachs. I. A. G. Owns iberia and has borrowed money both in the u. K. And in spain. Morgan stanley will fight a lawsuit from its former head of diversity who alleges she witnessed systemic Racial Discrimination against frarnse at the bank. Marilyn booker joined the bank in 1994, claims senior white leadership refused her plan to address bias and terment nated her position just last december. Morgan stanley says it rejects her statement and will vigorously depend suit. That is your Bloomberg Business flash. Anna . Anna minutes away from the start of the European Equity trade dage for this wednesday. Lets get to dani burger. She has a look at the stocks were watching. We got european car sales in for may. A agreement picture as was expected falling 57 that months. Ut the thing here is a big improvement. In april sales fell 78 . This means car makers are on their way to improving in terms of sales. The holl days are coming. People are less likely to fly. They are more likely to travel via cars. If they are going on a trip, maybe there will be some new car purchases to back that up. Matt maybe they will be electric cars and you can get double the money you could have gotten before as incentive. What is the story with william hill this morning . They are shoring up their liquidity. Raising shares about 230 million pounds. They are going double the on their hey have balance sheet. A strong position to weather their downside scenario. The plan is to move aggressively in the u. S. And grow in that market and that cash can help them there. Anna believe it or not for those not in the u. K. , boohoo. The name of an online retailer. What is the latest there . This is one of those stay at home stock stories that people are not going out to shop to buy boths they will turn to retailers like boohoo to buy gothe clothing. They expect to see growth of 25 . They have announced they are purchasing two other clothing ompanies, oasis and warehouse. Compared to a purchase they did last year was more than trip that will amount. Evaluations look good on this deal. They are pursuing m a. Their position looks strong at this moment. Anna, matt . Matt im on their website now. Not finding anything in particular. I see some things have just dropped and i will continue to search for a hot new fashion item. Thanks very much for that. Looking at some of the stocks that will move. A leopard skin bathrobe. I may pick that one up. Coming up, it is the market open. Futures having a tough time deciding exactly which direction to go. But it looks like well, now, there is all green on the screen. This is bloomberg. W . W . Uhiono anna a minute until the start of the cash Equities Trading day. Lets get here headlines. And closess schools as cases rise in the capital. Florida records record new infections. Jay powell says the fed will use all tools to support the economy and defends his foray into Corporate Bonds. Robert kaplan says policy is key to the recovery. Risks, india gains over a clash with china the himalayan border. Matt lets take a look at futures. Things have turned up for the most part. We see gains in most of the major equity Index Futures contracts. Not huge, and still a drop on some like the ibex in madrid, but we could get a little risk on trade, at least at the start of things. Opened upe higher. Opened see the ibex down. 2 , the ibex down. 5 in madrid. Theseks like we could get muddled unchanged openings across equity indexes. In amsterdam is up. 1 . ,he dax, unchanged and the cac also unchanged. Still a search for direction. It is a balancing act between the data, which was good, but nowhere to go for up but up for retail sales and concerns about the geopolitical interaction between china and india as well as the second wave worries. Anna second wave fears also so plenty to talk about. European markets opening fairly next. Investors are still balancing encouraging signs on the stimulus front with downward appraisals of the Global Economy and the threat of a second wave of coronavirus. By a seniord economist. I want to start with the role of Central Banks because you described the fed in your notes as the conductor of the Global Economic orchestra. For as long as we hear the music, i guess we all keep dancing. Are you trying to communicate in painting a picture of the fed . Is a bit of a cliche, but that is exactly right. The fed creates the music that well dance to. , we have all the conditions in place for a decent economic recovery. The virus is, with some exceptions, mostly under control. We see lots of evidence in many data that the economic recovery has started to take hold but critically, you have lots of Economic Policy support. The damage from the coronavirus is huge and will be longlasting. Lookst see anything that like a decent recovery unless policymakers do whackamole politics. That is exactly what the fed is doing. We are seeing the federal out new initiatives and what this is doing is boosting confidence. What we need to think about is which way do the vibrance virus trends go . As long as they remain positive on a global level, we are on the way to a decent economic recovery. Matt while the fed is winning at whackamole, what do you think of the white house with a trillion dollar infrastructure plan . On the one hand, you could say the u. S. Needs it. Crumbling roads and bridges all over the place. On the other hand, we hear very conservative politicians and foromists, art laffer, example, saying you cant give money to one person without taking it from another. Thats a question about whether there are significant debts from the stimulus. Deflation. Re for there are lots of unused resources in the economy. The u. S. Is credibly committing lowinflation so i dont see a risk from a debt finance fiscal policy. Enough fordont do skillet the risks are we dont do enough fiscal stimulus. Even if we start to lift the lockdowns, it is possible that after initial spend, households and businesses actually are inclined to safety much. During the lockdown, when things were closed, our inventory in voluntary savings when we open up, we spend but it we are nervous about the future, a second wave of virus, we may hold back our spending, we may save too much because we fear the future. Sector is not creating demand, governments have to step up. , demand. S jobs for me, this is pretty good news. Anna the paradox of risk, something we need to watch for. Is your assessment of what we have seen from policymakers in this crisis versus the eurozone crisis and the great financial crisis 10 years or so ago, is your assessment policymakers are avoiding making some of the mistakes theyve made in the past . Weve completely ignored the idea of obstacles that would have prevented us from doing the right thing with Economic Policy. When did economy is doing fine, dont do too much policy stimulus. But when you hit the wall, you should absolutely go for it and that is the big difference between this recession and the previous one. The financial crisis happened because u. S. Policymakers allowed failure. The eurozone crisis happened because european policymakers made mistakes in monetary and fiscal policy. Have the big risk of a credit crunch, deflation and its expression and we have stepped on the gas with huge initiatives and so far, they are working well. They outweigh the risk of aggressive debt and monetary stimulus. Not lower than the risk of doing something and allow a lasting recession to take hold. Matt interesting stuff and we will continue to talk about that. We are talking about this mostly from the u. S. Angle. We will talk about the european angle, as well. Kallum pickering stays with us. Coming up, south korea warns the north it will longer tolerate reckless actions after kim jonguns regime reduces a joint Liaison Office to rubble. We talked geopolitics next. This is bloomberg. Anna welcome back to the European Market open. Not long into the European Equity trading day, seeing modest gains. Lets get a business flash. The top stories today on the bloomberg. Hsbc is revising its plan to cut jobs to the london based bank while moving ahead to add 35,000 roles worldwide as it seeks to boost profitability amid underperformance in key markets. The proposal has been put on hold by the outbreak. Hsbc has 235,000 employees. Norwegian is extending a global cruise suspension through september. Plunged after hours on the news. They had been staging a recovery on hopes of a restart in services. A resurgence in places like florida, home to the Worlds Largest cruise port, could dash prospects. European car sales showed the first signs of her cover last month. A passenger vehicle registrations plummeted 57 from year ago. That is still an improvement over the 78 plunge in april as showrooms reopened after a twomonth shutdown. Thats your Bloomberg Business flash. Matt Kallum Pickering is still with us, wherein berg senior economist. We were talking a lot about what the u. S. Has done right, you said dave avoided the mistakes they made when they let Lehman Brothers fail and previous mistakes during the previous debt crisis. You still have to see this debt bailout plan, european bailout plan ratified, plus it seems everybody from spain to italy that needs the money wants to avoid using the esm for what it blowet up, and instead debt to come in italys case, over 150 to gdp. Do you have more concerns about europe and the u. S. . Kallum we should be a little more concerned about europe in the sense that it is very difficult across europe to commodities, especially fiscal policies. You have the instrument International Institution and it can pretty much do whatever it takes. On fiscal policy, it is a little different. It is not really the Economic Risks in the interim. What we need to watch is the expectation or 750 billion recovery fund, which we think will be ratified late this year, may fall to the wayside. It is about politics. It is not about economics. A good three weeks ago, we were watching nervously the budget discussions, and the market was increasingly thinking that italy is not happy with the way this is going. We have populism in italy creeping up. Could we be going for an italian exit perhaps . That is a tale risk to watch. The brexit negotiation could be decisive. It is critical europe gets the 750 billion agreed, that the italians are happy with it, and we can put risk to the wayside but this is a Huge International agreement. It is probably the biggest cross board agreement in history. It would be excellent for the europeans to support the mediumterm outlook, as we think they will. Anna we will fear from to finance ministers who helped craft it from germany and france later on today. We will listen to what they have to say. What about the prospects for a trade deal between the u. K. And eu . You talked about a managed no deal. If that is a real concept or not. Does that mean picking off certain sectors and doing a deal and then having a long transition for the rest of the economy to a no deal situation . What is your expectation . Given a prolife precise prediction on the u. K. Eu negotiations over the last four years is a complete horse race. In general terms, we need conditions for, at a minimum, a semimanaged hard exit. Hard for them to agree to some kind of comprehensive agreement. On leveltoo far apart playing field, governance. What we do see is a little progress on the irish border. The eu seems to be fairly happy with the way the u. K. Is progressing. Ireland border is part of the customs agreement. Northern ireland has a special agreement and that could at least mean the eu and u. K. Wouldnt face a cliff edge into a series of smaller cliff edges. This stagetough at to expect a deal by the end of the year, the. Anna thank you so much. Kallum pickering with us from berenberg. He will be on Bloomberg Radio at 9 00 u. K. Time. Coming up, second wave fears. Beijing closes all schools and u. S. Cases are up 1 . We are live in new york next. This is bloomberg. Matt welcome back to bloomberg market the european open. Were 18 minutes into the trading day and looking at some light green euros. The ftse, up one third of the percent, adding over 20 points. Up by. 1 , 12,334. The bank of israel governor says the central bank doesnt have the same firepower to deal with a second wave of coronavirus. The emphasis therefore needs to be on testing, isolation, and localize lockdowns. In hise to bloomberg First Television interview since becoming the governor last year. Israel started out this will crisis in a very wellpositioned, high growth gdp, largest low debt to currentaccount surplus, high growth, low unemployment and therefore, we had the buffer to whether a swift move in terms of exited out oflso the lockdowns fairly early and we see Economic Activity rising in the economy. Wave, we do not have as many buffers as we had before and therefore, we need to be able to do not across the board lockdowns. We need to be a multido testing, tracing, isolation, localized lockdowns if needed. We didnt dowhat well upfront his be very clear about unemployment support, various grants to business entities, and we would do well if we had plans that were clear, what they would be entitled to in case there is such a localized lockdown or even a more major one. Youve been very active in supporting economic recovery. Is the expansion of the qe program, over 50 billion shekels, is that on the cards to keep yields in check . Yaron so far, it seems so. At this point, the bank will do what it takes to support the economy from the tools we have, which is Monetary Policy tools. Committeery policy has two tasks. The first is making sure Financial Markets work and Financial Markets are in a difficult situation. Both the Government Bond market and the fx market need swift, strong action and theyve been functioning well ever since. The next step is providing credit and transmitting Monetary Policy. This, we have done through this qe program which, to give you a perspective, three times the size of what was done during the 2008 financial crisis. Youve got several other programs such as giving special loans to banks to provide loans repos, which include bonds as collateral, and we asd the rate, although a wholesome package, we will continue to do to ensure that we support the economy. I believe that as long as the fiscal side we have to remember, this is a fiscal crisis. This is a health crisis, economic crisis. Most of the burden is on the fiscal side. Islong as the fiscal support toward supporting the economy, supporting growth and productivity, the rating agencies will see it favorably conditionsre, credit should continue to be convenient. Yousef in terms of some of the other strategies, you have been buying foreign currency for a time. There are questions im getting from investors as to what your dynamic window is because you seem to be operating around those parameters. What are the boundaries you are trying to keep the israeli shekel within . Gov. Yaron obviously, i would not state publicly what our first of all, but some of the shackles shekelsion appreciation due to the drying in thehe dollar market onslaught of the crisis has been a reflection of the fundamentals that the israeli economy has exited early and relatively well out of the crisis. Of thesaid that, most brunt of the crisis has happened on the domestic sector, not on last thing the bank of israel wants to see is the export sector having more difficulties than the reduction in world trade, the problems still within the israeli economy, and therefore, our dynamic window has shifted to account for that and, obviously, where we see fit, we are not shying away from intervening. Anna that was the bank of israel governor amir yaron speaking to our colleague yousef gamal eldin. Coronavirus infections in the u. S. Are up 1 , a jump of more than 20,000 in one day with florida and texas the most affected. China is escalating containment measures in beijing as a growing outbreak in the capital has topped 130 cases. Is inre, Annmarie Hordern new york, but looking globally at the news flow surrounding this. Annmarie we are seeing pockets around the world, seeing uptick trends of covid19. I want to start in china because today alone, two thirds of flights for beijing were canceled. Schools are going to be returning to Virtual Learning as they are dealing with an uptick of cases. Is ae united states, it till of two cities depending on where you look. About 20 states are seeing an uptick in infections or hospitalizations. Texas, the secondmost populous state, they saw a new surge of infections and hospitalizations. The governor, who just reopened the economy, saying the hospitals have ample capacity but worries about people maintaining social distancing when they go to bars and restaurants. Florida reported the highest level of new cases since the pandemic to cold and the united dates states. The bright spot is the former epicenter of the coronavirus. We see deaths and hospitalizations in new york continuing to decline. It is funny because you hear debate over whether it is a second wave or the first wave hasnt left and we are seeing upticks in numbers. Matt we have a big story on hsbc. It had planned 800 job cuts and paused them. Annmarie they had paused the and theause of covid19 ceo talking about extraordinary measures of the pandemic so they didnt want to go ahead with it, but now, they are saying they will resume. This was first reported by reuters. It was always a matter of when, not if. Weve seen a lot of banks and other industries put a lot of plans on hold, especially costcutting measures. We will likely see that come back now as we see countries grapple with covid19. Deutsche bank is one that had us put on hold and they will begin measures. The bank, also going to maintain a freeze on all external recruitment. I wonder if that is something we will see throughout the industry. Matt definitely something we will be following closely. Annmarie hordern in new york. Coming up, germany splashes the cash on green initiatives, but has its pandemic budget gone far enough on the environment . Our next guest says the answer is no. This is bloomberg. Matt welcome back to bloomberg market the european open. 30 minutes into the trading day and if you take a look at what we are seeing in terms of the equity indexes this morning, you saw really a struggle for direction. You are seeing equity indexes starting to put up for more gains across europe. This is the broader stoxx 600 benchmark index but on the individual indexes, the ftse up. 8 , the cac up, the dax up. 6 . Look at the sector breakdown on the stoxx 600, which industries are doing the best and which are doing the worst today, you see retail at the top after the u. S. Retail number came out better than expected, a surprise on the upside and really, the economic surprises. Weve been showing this economic surprise chart throughout the day that hillary put together. It is fascinating to me the u. S. Surprise index is so high. Maybe we can see the eurozone and asia follow and that is perhaps what investors are betting on today. Anna we are all thankful have the charts. Lets get an update on the first word news. Top news from the bloomberg, the u. S. Economy has a long way to go. Thats the message Jerome Powell gave while testifying for the Banking Committee. The central bank chief said the economy is likely to see a period of significant improvement, but it will probably leave the labor markets well short of the levels seen before the pandemic. Merkel doesnt expect the eu to agree on its Recovery Plan until july. It is a sign of difficult negotiations that lie ahead. The Program Needs to win the backing of every capital, but divisions persist on how long it will run. Leaders will debate the plan at a summit on friday. Hitting the bonds market again, selling its second round of debt in days after drawing over 31 billion euros for 30 weeks. It is offering 5 billion euros of its benchmark, the largest auction since january as the country increases its pace of borrowing to fund stimulus. Global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. Matt lets talk about how green germanys stimulus package is. Our next guest says it is not but when germany announced the plan to mitigate the economic fallout of the coronavirus, chancellor angela they wereessed that oriented. Do the here to the blocs Green New Deal . The director for the green center of climate hand resources. She is director of economics at the university of munich. Let me ask you where you can germany is falling short because it looks like when you compare this package to that of other nations, that it is really rather quite green. It is green in some sense, in the sense that there are a lot of stimulus packages and components for specific industries and sectors but what is really missing is a consistent alignment of all the measures with respect to the climate goal. The focus is on specific technology that does not account impact,sions, climate Broad Spectrum of technologies and sectors. Good morning to you. With that in mind, what changes would you like to see made . Stages ible to make changes at this late stage that would make it easily greener . Numberthere could be a of changes made. On the one hand, some claim simple climate check on investments that are supported while broader scale, r d and innovation, there could be changes made but also, there are a couple of things that are shortterm already, like the hydrogen strategy, so they could enhance it by improving framework for the carbonization relating toization Carbon Pricing and other issues. The talk to us about future of hydrogen and the german decision on how to produce it. This hasnt really been decided. This is still an open issue, isnt it . Karen the hydrogen strategy, which also came out a week after the Recovery Program, it states in the long run that hydrogen should be produced from renewable energy, some Green Hydrogen and only in the mediumterm, Blue Hydrogen would be ok. But could use some fuels, combined with Carbon Capture and storage so no unplanned emissions get into the air. I think that is the right the way the right way to go. In the shortterm, technologies that are available and in the to dterm, you go for a way carbonized your economy completelye. Matt what about the big public issue, whether or not to limit speeds on the autobahn . One thing people dont be seem to be talking about, i guess they have been in recent weeks because of the coronavirus, concerns in the meatpacking industry but how to limit meat consumption. Do the measures do anything to answer either of those questions . With respect to speed limits on the autobahn, there is nothing in there, but from my perspective, that is not one of the most important issues we should tackle because that doesnt really contribute a lot to the reduction of emissions. And respect to meat agriculture, i dont think there , and iting in there is an enhancement of the climate protection act program for 2030 that came out in december of last year. There are a number of measures with respect to agriculture, but habits is a difficult topic to tackle. We had a debate about the cafeteria a couple years back and it created a lot of controversy, so that is probably one of the reasons they are falling and little short in that respect. On a broader level, if you look at the requirements within the eu for Green Infrastructure spending, to meet the goals set out by the eu, how does the German Package help germany reach those goals . Karen for many of the measures that are outlined in the package, there is no concrete number for infrastructure. There are plans to enhance Infrastructure Spending on grid, but it is usually in a package deal where measures are implemented so it is hard to say the exact amounts that will be spent on that. Let me finally ask you, you recently wrote a paper, innovative co2 pricing model for germany. The Carbon Pricing issue, the package we had before the coronavirus crisis, it was widely derided as ridiculously now, it seems, it will be even more difficult to lift oft cap due to struggles major employers like lufthansa. Wendys can germany needs to do about co2 pricing . Karen with respect to air traffic, it is really not in german hands because it is covered by the admission trading system of the eu. The original, mainly with respect to the German Climate tax, although it is supposedly a fixedprice cap. The price was set after renegotiations at 25, that is about what you have in the eu emissions trading system. It is too low to encourage many things with respect to changing to green technology, and im not quite sure what would be so problematic to raise it because what we see is fossil fuel soces have gone down a lot, basically, there would be an offset between Carbon Pricing and fossil fuel pricing. In the short run, it wouldnt make much of a difference with respect to increasing prices, and it would give households and firms alike the opportunity to to and calculate those higher prices. It is an opportunity that has been missed in the Recovery Program to get more stimulus through this measure than we have before. Also , thank you pittel very much. Ifo institute and director for the center of resources and director at munich university. Next, the eu faces a cultural catastrophe according to a new report from Oxford Economics warning of a hit to the arts. We speak with the head of the Creative Industries federation about their findings. This is bloomberg. Going to beare shaped by what happens over the next three months and how we start. This season has been significantly impacted by covid. We hope next season will be less impacted by covid from an over financialational or perspective. Anna that was the ceo of the premier league. Football returns to the u. K. Today but fans will have to watch from home. Gamese first time, many will be available on tv without a subscription. One form of entertainment to another choice you could make. Culturalaces a catastrophe according to the Creative Industries confederation. New research. From Oxford Economics reveals the sector is on the brink of devastation. Over 400,000 jobs could be lost, cutting 100 billion pounds a week in revenue. Creative industries are projected to be quick hit twice as hard as the wider economy. Joining me, the Creative Industries federation ceo. Looking at the details of the Oxford Economics report you have commissioned, clearly different industrythe creative are impacted differently so which are the areas of the created universe you are most concerned about . Hass you say, the pandemic affected all parts of the creative ecosystem, but there are some, particularly those ,hat rely on Live Performance performing arts venues, music venues, they are going to be particularly hard hit, but i suppose the real challenge with it isandemic is that going to reverberate for a long time. Institutions are going to take longer to get up and running, but also what we are seeing is perhaps some areas where you wouldnt have thought would be particularly as hard hit such as postproduction and more Digital Industries will be hit over time. We see a real challenge in design, craft, film and importantly, the arts within himself, we have thousands and thousands are affected. Anna the longer the uncertainty, the longer this lasts. The greater the devastation for parts of the ecosystem. The government has appointed a leader on this, a cultural commissioner. Is there any budget behind what the government is doing for the Creative Industry right now or do the industries have to line up with everyone else to have bills paid and the like . Caroline pc a different picture around the country. Theales and scotland, administrations have both come out with specific support packages for the Creative Industries. We dont have that yet on a it hasde basis but pulled some funding from its current budget. There are lots of discussions thats why were threepoint plan, the introduction of some. Ultural renewal fund we have been most hit by social distancing, we are asking to avoid a cliff edge. In terms of jobs, a self employed income support scheme. This will place Creative Industries at the heart of social and economic regeneration. We know we can build a new future, which is built on innovation and inclusivity. We know the Creative Industry got us out of the last recession. We believe they can help us get out of this one. Any have you thought of marketbased solutions to this . You can see big differences between the Creative Industries, especially in london and the markets as sort of a social group, but they interact so much that it would seem there could be some sort of solution. Caroline absolutely. Where we are seeing the biggest impact is obviously going to be in london initially, but we know that london and southeast are also going to be the fastest the bounceback. These are highly innovative, agile businesses. Scale, andn a global they generate activity in lots of different parts of our towns and cities all over the country. A whole lot of innovation coming from the sector in terms of how they been able to switch to digital platforms, the ways in which they are applying their skills and to different sectors, the in Mental Health and wellbeing, so i certainly think that the sector is definitely on a firm foot looking for how they could transfer their skills, how they could work with other business sectors, but fundamentally, i think we have to recognize at the heart of this, a lot of our culture does organizations and institutions that are fundamentally reliant on not huge amounts, but small amounts of taxpayer funding that they increase substantially in order to create the 111 billion pounds sectorenerated by the prior to the outbreak. Anna i want to get to your response of recent elements. Prime minister johnson talking about cutting down the two meter. Istance role to one meter what would be the impact on the Creative Industries of taking the distance role down from two meters to one meter. Would it make more businesses viable . Karen absolutely, it would. It is not a whole solution at all. Verizon around the size of venues we are talking about it varies around the size of venues. We know some models can operate on a lower capacity level than other theaters. With all of this, there is no onesizefitsall that this is going to work, but reducing the social distancing measures are absolutely key. The other issue that is really important, people need to feel safe. A lot of this is about making sure that the public feels safe and feel confident and actually want to go back to these venues. Is going tod that take perhaps longer than we which is why it is really important that we are thoughtful about how we help these businesses get back up and running again. Matt absolutely, especially since so many of these employees arent helped by furlough schemes. s creativerbury industry federations ceo. Mliv editor sees enough and situated Risk Appetite to sustain a rotation in the value of cyclical sectors. More about her outlook for the second half of 2020 next. This is bloomberg. Anna welcome back to the European Market open. 55 minutes into the trading day in europe this wednesday morning. Lets get to our markets live editor who joins us with her thoughts on the equity market rally. What is your assessment of where it could go in the second half of the year . We see thekets live, equity rally able to continue going into the second half, thanks to optimism about easing lockdowns, Economic Data bottomed, we see increasing confidence. The key is a rising tide lifts all boats. This rally can lift some of the most unloved cyclical stocks. Tech, autos, instead of like we saw earlier in the year. That means investors are more confident and are willing to buy ndese more depressed e stocks and increase spreadth makes for a more stable rally. Matt Heather Burke from the mliv team. Check out her work on the blog, type mliv to get that. We are looking at equity indexes rallying across europe once again. Not putting up more than 1 gains, but we are looking at solid increases with the ftse up 52 6290oints to 12,390. Dax up to surveillance is next. This is bloomberg. Second wave fears. Beijing cancels flights and orders in schools to close as cases in the Chinese Capital rise. Jay powell says the fed will use all tools to support the economy and defend its foray into Corporate Bonds. Risks add tocal headwinds for investors. North korea must suffer consequences of it

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