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Chancellor unveils his 30 billion pound stimulus package. We will get reaction from the labour party, his counterpart joining us shortly. Life aliveds london, sitting in for francine in the early part of the program. The london market is the real laggard. Well. X in germany going s. A. P. s numbers certainly a big weight in the dax and a big help in those efforts. We do see a little bit of stalling in the risk on moves. We see some of the oil price moves, down by. 7 . Checking ino worth on. Angela merkel in brussels calling for a huge amount of cooperation needed to save europe from its current challenges. Lets get a first word news update. Morning. Global coronavirus cases have exceeded 12 million with the u. S. Now counting for more than a quarter of confirmed infections worldwide. California and texas are reporting a surge in cases. Says the fed president renewed threat is adding to pressure facing the economy. She says these numbers are troubling. Australia is suspending its extradition agreement with hong kong. The move by Prime Minister Scott Morrison is set to further inflame tensions with china. It follows canadas similar decision last week. They will give hong kong migrants fiveyear visas with a pathway to permanent residence. Morrison says the new Chinese Security log represents a fundamental change. In israel, critics say Prime Minister Benjamin Netanyahu power to undermine the democracy. This week, parliament approved an emergency law that curtailed its own powers. It allows the cabinet to take any decision deemed necessary to curb the spread of coronavirus. Netanyahu says these emergency measures are indeed necessary. Global news 24 hours a day on air and at Bloomberg Quicktake powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Anna thank you very much. The Global Travel industry has been left reeling from the coronavirus pandemic. Expedia is competing for consumers in a shrunken market and with less money for advertising has to be particularly strategic. Expedias Group Chairman told us why he is not planning to join the facebook boycott. Believe inso sure i an effective as being effective, but ive been saying for many years now that as thesen must come, businesses grow ever larger, and im particularly thinking in this case about google, but others as well as they become google is the only because i is the only actual monopoly. Others have varying levels of competition, but absolutely, when you have monopoly power, you have to have regulation, and i think in the next couple of years, we will probably get closer to it than we have ever been. I think that is healthy. Of companiesnumber are boycotting ad spending on facebook over the companys policies on hate speech. Is that the right thing to do . Are you doing the same thing . No. O, we are not look, we are not going to support what we think is hate speech. We are pretty careful about that. Long very much a supporter of mark zuckerberg. I think hes obviously i think hest also completely decent. I thought that his policy of saying im not going to politicalssentially advertising was wise because i think its almost impossible to try and regulate what people say politically either for or against something, and i mean speaking of the candidates themselves and the apparatus around them and all that. I just think thats sliding into a bad business. When there is and ified hate speech, think they are addressing it, of course you are going to try and not promulgate that using the tools that you can use. I dont believe in boycotts. Againsta boycott facebook is ill advised, and ill considered. And, you know, im hopeful i addressing theis extreme forms of speech, but the itth is that and you find in any group of people more than two, which is you are going to have opinion. Voice tole can have their opinion and are amplified our Internet Communications miasma throughout the world, you are going to get a lot i or go on anylack channel of your own colleagues, give them anonymous voice, they are going to say terrible things about you. Not all of them, but some of them will. Get used to it. Was barry diller, iac and expedia Group Chairman, speaking to bloomberg. More coming up on the Program Including our conversation with the u. K. Shadow chancellor. This is bloomberg. Anna this is bloomberg surveillance. Im anna edwards here in london. Lets get to business Bloomberg Business flash. Leanne s. A. P. s revenue beginning to recover from the pandemicfueled slowdown. Europes Biggest Technology company has been buoyed by Software Sales and cloud computing. Cloud revenue climbed to about 2 billion euros. Airbus has failed to secure any aircraft orders for a third month, and the company suffered one cancellation. That brings its total net orders for the year to 298. The tally marks a worsening of the crisis for airbus. It had previously managed to avoid losing business by agreeing to deferred deliveries. The power vacuum at commerce a littleet to last longer. The Supervisory Board is extending its search for a new chairman and chief executive following a shareholder revolt. It prolongs uncertainty for the lender as some investors call for a broad overhaul of the company. And thats your Bloomberg Business flash. Anna thanks very much. Siemens shareholders will vote on spinning off Siemens Energy today. The Company Plans to cede majority ownership of the unit in late september to create a newly independent turbine and Oilfield Equipment maker. We spoke to the ceo earlier. The reason that we do the we believe our inpany is very relevant unprecedented times and speed of change. Massive value creation. A similar method we do now with splitting our company into the Industrial Software automation company, including infrastructure as well as Siemens Energy. We talked about Siemens Energy to the market. This is also about d risking new Siemens Energy, focusing on Software Infrastructure and modern mobility. That is a restructuring story. There is a lot of overcapacity in the energy market. Weak oilthere no very price that will stop you from doing this at the end of september . The oil price is not relevant. Heardequity story, we about the equity story, the restructuring case. The real equity story is about conferring Siemens Energy from Traditional Energy generation into Renewable Energy. Stake know, we have a 67 . A Renewable Energy, one of the two Largest Renewable Energy companies in the world. Thats the future, and what we it going to do is transform into Renewable Energy and using the conductivity, which becomes more and more relevant in a multigeneration environment, so we are confident about this move. E do not need Capital Markets we will be spinning off 55 . I believe the biggest potential on that move, which we will hopefully approve today, will be a potential rewriting of siemens ag. Anna we will watch how the vote goes later on today. , we askp in the program the labour party what they would be doing differently. Our interview with annalisa annelieselise dodds, shadow chancellor of the u. K. Next. Anna economic finance politics, this is bloomberg surveillance. Lets focus on the u. K. Response to the coronavirus. Speech, thete chancellor outlined a 30 billion package of tax cuts and spending increases aimed at increasing confidence among consumers. In just two months, our economy contracted by 25 , the same amount it grew in the previous 18 years. Property transactions fell by 50 in may. House prices have fallen for the first time in eight years, and uncertainty abounds in the market. We need people feeling confident, confident to buy, sell, renovate, move, and improve. That will drive growth. That will create jobs. Markets andsing boost confidence, i have decided to cut duties. We need to be creative. Ive decided for the next six months to cut back on food, accommodation, and attractions. I want every person in this house and the country to know that i will never accept unemployment as an unavoidable outcome. We havent done everything we done so far just to step back now and say job done. In truth, the job has only just begun. Anna we are now joined by the u. K. Shadow chancellor from the labour party. Great to speak to you. Is it difficult to know, when you ask for a statement that was all around jobs, jobs, jobs, and at a rate of one billion pounds a minute, he really focused on jobs . Ms. Dodds well, there were a [indiscernible] proposed by the chancellor yesterday. In particular, we said there needs to be a scheme oh, sorry, we had some internet issues. I hope they have been resolved. We called repeatedly for the chancellor to look at a scheme to support young, unemployed people. We have schemes that have worked before in the u. K. Welshare schemes by the labour government. Seems like the government has finally listened to those calls. We will have a socalled kickstarter scheme. We need to make sure that scheme involves a genuinely new opportunities for young people, that its not just pushing other workers out. To the extent that it is put into place, of course we support that, but, you know, there was one big problem with what the chancellor announced. He is sticking to this onesizefitsall approach to sectoral issues that are just not sensible. We are seeing a Job Retention selfemployment schemes being removed at the same rate as the whole economy. He doesnt need to shift approach. Anna which sectors would you support if you were in his shoes . A, forou do more grady example . Would you do more aviation, for example . Like we said to the chancellor and the transport secretary that they need to have a strategy. What they have now is Different Airlines competing against each other, often using government support, effectively, to facilitate restructuring that they were previously committed to. Taking people off the furlough reemployment, hemorrhage of jobs going on. We accept there will be change in aviation in the u. K. There has to be change because of the climate crisis. There also is likely to be a structural reduction in demand for air transport because of more home working, etc. Nonetheless, that change should be part of a plan, so we have asked the chancellor repeatedly to sit down with industry, sit down with trade unions, work out a plan for restructuring of this industry rather than this really destructive hemorrhage of jobs that is occurring in different firms. In other parts of the u. K. Economy, they are still not even. Llowed to open they do need to have continued protection through this crisis. If they dont, the inevitable result will be unemployment. Its about targeting those funds in the first place, and the chancellor, we feel, has not been doing that sufficiently. Anna we will perhaps hear more about how the chancellor plans to pay for all this in the autumn. How would the labour party play pay for all of this . Would you move more towards a wealth tax . Course, the most important thing the chancellor and his government needs to do is to ensure growth. Where apparently in a low Interest Rate environment, except that may not continue forever. For as long as we are, we really, really need to focus, and it would be an imperative anyway, to ensure that we have that growth coming through. In a u. K. Context, this is not just about the economic measures. We have big challenges around building up confidence. The Pension System is not yet working to the extent it is in many other countries. We have repeatedly set outweighs that system can be improved. It really needs to be so we get people confident in us confident enough to be going out and consuming. Its all very well giving them incentive to do so, but if people do not have confidence in the first place, thats a big problem. They mightions that be introducing tax races across the whole population, you know, income tax or National Insurance across the whole population in the autumn when we may still have weak demand, that does concern me because that could knock down some of the growth in demand that we desperately need to be growing our economy. And recoup the interest that would be paid on the debt. Anna we were called on by the chancellor yesterday to eat out to help out. Will you be doing that in august . So dodds i have been doing since we have had the ability to go into catering outlets, and i know how hard it has been for so many particularly small businesses, but for people working in the hospitality sector in general, it has been a really, really tough period. Of course, they are still in many cases not able to operate costeffectively because of the continued requirement around social distancing, so i would say again, incentive can be a positive way of driving up demand, but really what is needed is in the u. K. Having a. Uch stronger handle hannah thanks very much for joining us today, anna thanks very much for joining us, dodds, the u. K. Shadow chancellor. This is bloomberg. Anna economics, finance, politics. Live in london. Lets get to first word news with leighann gerrans. Leighann thank you. Announced 30 billion pounds of tax cuts and extra spending to support the u. K. Economy. He is raising the threshold, cutting taxes for the hospitality industry. He even offered vouchers to cut the cost of eating out in august. He aims to boost Consumer Confidence and protect jobs. Ties tot donald trump u. S. Mexico, he met the mexican president. He says a relationship between the two countries has never been closer. The meeting was to celebrate the finalization of the u. S. Mpa trade pact. Joe biden will call for a moderate approach when it comes to the u. S. Economy. Sources have told bloomberg his plans would shelve some of the more ambitious proposals being pushed by progressive democrats. The president ial nominee plans to deliver the details in an economic speech which is happening later today. Global news 24 hours a day, on air and at Bloomberg Quicktake, powered by more than 2700 journalists and analysts in more im 120 countries, leighann gerrans. This is bloomberg. Anna . Anna lets stay with u. K. For the moment. The government outlines another measure to boost the economy. The Resolution Foundation says borrowing is on course to hit 350 billion pounds this year. Lets get some perspective in the gilt market then. And the broader conversation about straight policy. From get to john wraith ubs. Your initial reaction to what we heard from the chancellor, rishi sunak yesterday, some of the criticism coming from opposition parties and think tanks around whether there should have been something more specific or whether the furlough scheme should have been for longer. What is your response . It is clear there are some fairly innovative announcements among the chancellors comments yesterday. From the market point of view, we look at the big numbers, how much is it all going to cost, and how likely is it essentially that spending or some of the spending pays for itself in the longer term. In other words, by trying to through the jobs furlough bonus scheme, for example. Meanthat mean does that the tax receipts or spending consequences longerterm for the government are much smaller than the initial outlay . Time will tell whether that happens or not. From a market point of view, i think this is interesting come and you can see for price action not of major consequence, at least not initially. Anna interesting isnt it, that it is one billion pounds a minute in a 30 minute speech. He is talking about Interest Rates he has referenced low Interest Rates today. What is your assessment, what are your assumptions about how we pay for all of this . The heart ofes to this. I think in the shortterm with strong safe haven demand from investors for the safest assets in other words, government that and with the fact qe purchases are ongoing, there isnt the likelihood that yields will move higher because of the extra borrowing in the u. K. Or anywhere else. Longerterm, it depends on whether the economy picks up where the extent to which these schemes help the economy pick up. If it is significant, it affects long term, they could pay for themselves. But if it is just spending money which doesnt ultimately help the economy in a significant way, it is going to mean a great aal of more borrowing for long time to come. If in due course when the economy recovers and coronavirus is no longer actively with us, it points to significantly higher yields because the government is going to be borrowing unprecedented amounts of money for a longer period of time, and that will require investors investors will require a higher return on their investments. Anna but what about negative Interest Rate policy . Where does that come into the equation, what you just said there about yields, whether they would edge higher into the future . John i think there story is very i think their story is very different from the front end. The pandemic, potentially run the brexit situation later this year and so on, if they crystallize, the mtc may feel it has to take rates negative, even though it has serious potential negative consequences as well. They may feel they need to do that. For the foreseeable future, there will be low rates, low yields, based on low policy rate expectations. At the further you move down the nearterme, the less policy matters and the more it is about the supply and demand equilibrium for Government Debt issuance. 30year look at 10, 15, yields, there is an anchor on the front and that is more about how much does the government have to pay in interest to be able to sell the amount of debt it needs to sell, and when things return to normal as they are selling, multiple amounts of gilts compelled to where they. Ere in years gone by, aboutwhen we talk positive fields around the world, we talk maybe about less maybe less about negative Interest Rates. John it is currently in the background, yield curve control. We have active qe still going on, and i think the assumption is if the bank of england needs to do more in the coming months, they are likely to carry on with qe in its current form. But at some stage they may conclude that the amount of reserves they have created, effectively the right amount for the outlook about for the elbow, but the idea that they need to control yields to get stability embedded in than of Financial System and therefore by submitting yields not just for the government but to corporate borrowers and also to try to keep those yields relatively orderly, at relatively low levels. They could try yield curve control in due course, but clearly with yields close to historic lows and volatility , intraday,really shortterm volatility pretty low, there is really not a case for them to be controlling yields at the moment because they are under control. The talk of it may be does enough. We will talk more with john wraith about europe in just a moment. Angela merkel calls for compromise over an ambitious recovery package. We will talk about that next. This is bloomberg. Anna economics, finance, politics. This is bloomberg surveillance. Thats get to the Bloomberg Business flash, a rundown of top stories we are covering at bloomberg. Here is leighann gerrans. Leighann twitter is looking into alternative revenue streams, including a subscription service. Sources told bloomberg the social network is assembling a new team to look into the possibility. Idea has been discussed for years. There was a previous proposal to charge users for enhanced features, but it has never materialized. The power vacuum at commerzbank is set to last a little longer. The Supervisory Board is extending a search for a new chairman and chief executive. The previous spot is step down following a shareholder result. It prolongs uncertainty for the lender as some investor calls for a broader overhaul of the company. May beecards problems growing. According to dow jones, the Justice Department is looking into a sin to company if the sin tech company played a role into the alleged 100 million fraud. Two businessmen have already been charged. Were tryingays they to trick corporations. Chancellor merkel has urged e. U. Members to compromise on an ambitious recovery package. The german leader told lawmakers in brussels a common spirit is needed. Haveure on states who resisted a proposed 750 billion jointund financed from borrowing. Still with us is john wraith from ubs. Lets get his calls on what is going on in the euro zone. This Recovery Fund does this seem to you if it will actually set a precedent, or is it a oneoff, as we are told by many european politicians . You could clearly intend it to be a oneoff, benefits with the underlying situation, which we all hope is a oneoff. It is certainly unprecedented. And this is directly structured and explained to those countries who are reticent to get involved , that this is not something that will lead to a more common, wider move to more fiscal union. Clearly that is a concern for those who do not want to move in that direction. The big question here of course is, if this amount of money is needed to address the situation, which i think a lot of us would agree is the case. That goes back to what we were talking about in the u. K. As well. Heardgoing to have to be that these countries will have to put aside their reservations, sign up for support, and trust that it will be a oneoff because if they dont, longterm consequences will be more serious and more expensive for everybody. Anna do you think Angela Merkel is saying the right things to win over the frugal four . Is there a path forward that can be found here that wins out, that wins over those countries within the eurozone and outside that has been resistant . Yes, because i think the right thing to say, given their reservations, is clearly to try to convince them that this is not the stance of sort of a step in a direction that they dont want to go in but something that is central to address the current situation. I think that is how Angela Merkel is explaining it. The question is whether they can take her at her word or whether they themselves assess what is going on to be ultimately a oneoff, necessary Emergency Response to an unprecedented situation, or a sort of furtive, secretive step in a direction that they dont want to go and. E will have to wait to see if they dont go into this direction and it is ultimately needed to protect economies from a worse face come that the consequences may be more expensive for each country in the euro zone or potentially serious for the eurozone in and of itself. Anna indeed. What about italy . We spoke my colleague francine spoke to the italian finance minister. He said they could tap the esm if they decide to. They have not decided whether to you. He said there is no stigma attached. Is there going to be a stigma attached to tapping any of this European Central support that is available . Know, i dont think stigma is the right word. In times gone by, when economic circumstances were more ordinary theseere were not extraordinary back on situations destroying everybodys public finances and there were these extraordinary situations destroying everybody public finances, that was the case. The big question of course is whether italy or anybody else is going to be prepared to sign up for the conditions that come with access to the esm. That obviously remains a major bone of contention for the countries that are struggling fiscally, and they want to have support from the other eurozone countries with less conditions attached because they think that is how a union of equal members should ultimately work. That is exactly where the big bone of contention lies and where some of the fiscally frugal dont want to go down that road. They want the conditions attached. Path out ofind of this crisis do you expect for the eurozone economy . How quickly do you think we return or how slowly do we return to previous levels . Permanentere be more a scarring story for the eurozone . John the eurozone has this extra layer of complexity because of the nature of the union, and the fact that it is not as comprehensive fiscal union, banking union, we had that monetary element essentially. When we go through these difficult economic times, it brings those stressors to the fore and makes them more serious. But on an underlying basis, the euro zone the countries within it, are in the same situation as everybody else with regard to permanent scarring. When do we get back to more normal levels and yields and more normal economic circumstances . The honest answer is, well, when coronavirus is no longer a massive headwind or risk to economic activity. And of course, the only thing you can say to that is, nobody knows. If a vaccine comes online sooner rather than later, or if the infection rate is able to be brought under real control while economies get back up on their feet and reaccelerate, then clearly weaken hope for more nearterm returns and normality, and therefore the scarring will be less serious. If things drag on and the infection rates picking up with no sign of a workable vaccine, the risk of scarring rises over time. Confidence wed of can bring back to servicebased economies is a big question. Good to speak to you. John wraith, head of european and u. K. Rate strategy at ubs. Italy will tap the Euro Area Bailout Fund if it needs to, according to the countrys finance minister, spoke exclusively to francine lacqua. We have to be the first to measures ander of follow that with each with what has been essential containing the virus, to reopen gradually the economy. Response hasnomic been bold. And revise our forecast, but out of the data we have so far, they indicate to us move itible downward will be. It so far to be closer to our forecast, and now we are both aton phase two, the european level and the national level. Francine the role of states in alleconomies is decreasing over the globe because of the pandemic. But in italys case come how do you reassure investors that state control leads to efficiencies . There is a stronger role for the state to protect the economy, to bear losses, to inject guarantees or sometimes even capital. This only when it is necessary. As far as it is necessary, and overall it will be temporary, when needed. Anything can italy do to measure success . To have a commitment that you will not deviate from . Is there anything you can to go sheet with . Common sense doesnt always prevail. Roberto the problem of making we allf the funds have to make the best use of these resources. By the way, these resources will be based on a method that is very similar to whichever makes the resources dependent on the concrete implementation approach. So you need to have a concrete approach and there is a positive plan has to behe coherent. Wehe common goals of think that the Commission Proposal has struck a right balance between grant loans that they mentioned. Will, of course, oppose any attempt to water down the Commission Proposal. We will support the Commission Proposal as it is. And as far as the timing, i think that everybody is aware that timing is essential. So we will we have to and i amby july, confident that the negotiations will be concluded by july. Anna that was italys finance minister, roberto gualtieri. Scott morrison sends in addition ask tradition agreement with hong kong. More on that clinical story next. This is bloomberg. Anna economics, finance, politics. Bloomberg surveillance. Tensions between china and australia are ratcheting higher following hong kongs new security law. Scott morrison has suspended an extradition agreement with the city. Turning us live is Annmarie Hordern who has details. This is not the first time australia is not the first country to do this. What is the latest on this relationship . Annmarie certainly not. More countries are expressing concern, australia just the latest today, saying they will suspend its extradition agreement with hong kong, and they will be giving skilled migrants from hong kong fiveyear visas with a permanent pathway to residency. Are concerned about the Hong Kong National security legislation with china. Canada extended its agreement with hong kong last week. U. K. Is also opening its doors to millions of hong kong residents. Australia is taking it from stance, similar approaches in the stance against china. Andtions between australia china have been icy recently. Australias largest by far, number one trading partner. We have tensions regarding with mine, where australia wanted to send investigators. China imposed tariffs, halting beef exports. Want to watch. The Australian Dollar is up by. 1 . And significant relationship, interesting to see the word being used. Thank you very much, Annmarie Hordern, for bringing us that geopolitical look. Looking broadly positive. Surveillance continues next. Tom this morning, it is a simply too small to be effective. The chancellor offers a statement that helps, but to many it is not enough for the labor crisis to come. In america, Vice President biden will travel to his scranton, pennsylvania, and say no to the hard left and will offer a incremental path to economic prosperity. He will not leapfrog political reality. This morning, stocks surge. Gold surges as the renminbi strengthens below seven yuan per dollar. China will provide stimulus. The United Kingdom will provide stimulus. Trump will provide stimulus. You get the picture this morning. Good morning. Loomberg surveillance anna edwards is in london

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