We were seeing a bounce. A few trade and tariff exclusions will now apply on chinese goods. We are closer to reopening, and oil rallying. Some permian drillers are cutting output even as the Texas Railroad commissioner ryan sitton told us yesterday that quotas were down on arrival. We are seeing diamondback,s diamondback,seeing centennial, and others cutting output today. Guy that is feeding through into the china story, and also into what is happening here in europe. Oil and gas the best performing sector. Brent is up 11 . Higher the00 gapped first thing this morning. Eurodollar taking a knock earlier on, that big hit coming through from the German Constitutional Court calling into question the ecb qe program. That also had a fairly significant effect on btp yields. Currentlying higher in italy. The combination of the positive and the negative coming together here in europe today. Stocks higher, but we are seeing the currency coming under a little bit of pressure. Coming up, we are going to speak exclusively to the European Union trade commissioner, phil hogan. We will talk to him about the impact covid19 is having, and much more. That conversation very shortly. This is bloomberg. Guy live from london, im guy johnson, was vonnie quinn in new york. This is bloomberg markets. Lets get you caught up with the bloomberg first word news. Heres ritika gupta. Ritika President Trumps Reelection Campaign is focusing attention on the production that a post coronavirus world. He will campaign on the idea that he can rebuild the economy better than joe biden. British Prime MinisterBoris Johnson is running into criticism from both his allies and opponents. Neither are happy with his coronavirus plan. Lawmakers from Johnsons Conservative Party won him to ease the nationwide lockdown. Labor unions and opposition politicians demand that there be a proper protection for employees. The top court in germany has given the European Central bank three months to fix its 3 trillion quantitative easing program. Judges ruled that some parts of the program arent backed by European Union treaties. Under quantitative easing, the ecb buys bonds of eurozone governments. Is on its longest winning streak in nine months. New york crude is up for a fifth day in a row. There are signs that the worst of the Global Supply glut may be over. Theres been only a modest rising in inventories at cushing, oklahoma. Global news 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. Im ritika gupta. This is bloomberg. Guy thank you very much, indeed. Lets talk about what is happening in the trade environment. We clearly have a market responding today to more positive comments coming through from the administration in washington about whether there will be an extension in terms of the tariffs being applied to china. This is a 3d game of chess because the eu is also finding itself caught amongst the various stories developing here. One is to figure out how to deal with the United States. And how it ultimately deals with china is really tricky. You wonder whether or not the eu and the u. S. Are going to become more on the same page when it comes to dealing with beijing. Vonnie right, and you wonder how much the pandemic has changed what each side is willing to negotiate about. Before, there was plenty of something that might now be in short supply. Global supply chains have come under a lot more scrutiny since the pandemic started, and someone. You mentioned some of the exclusions. The ustr is considering a possible extension to products that would have been part of the 200 billion in tariffs, so we will see exactly what they are and whether that could be broadened wider. We are seeing reaction in the offshore yuan, trading a little stronger today. It had been weakening. Lets get to another best of bloomberg interview weve been doing. Erik schatzker, and another fantastic conversation, exclusively to sam zell, the billionaire investor and equity group chairman. They talked about how sam sees the market right now. Sam despite the fact that we have been in lockdown for six to seven weeks, theres very little activity, very little transactional activity, very little opportunity to do anything. I think everybody is in kind of staturen the headlights at the moment. At least so far, just sitting here watching, and we are not seeing anything happen. Erik why do you think that is . Is it because prices arent low enough yet . That rather than referring to it as prices arent low enough, i think that theres been very little opportunity of price discovery. Sellers is that those that want to sell still remember the prices that were available seven or eight weeks ago. The buyers are looking at a very different world, and expecting to see significant this counts from where we were seven weeks ago. When youve got that big a spread, nothing happens. I think that is an accurate description. Erik what about you . What do you need to see before you feel motivated, even excited about putting capital to work . Sam i think we are all faced with an extraordinary level of uncertainty on how the reopening will go, uncertainty as to win the reopening will happen, uncertainty about how people will respond, how soon will anybody get on an airplane, how soon will anybody stay in a hotel, how soon will anybody go to a mall. The fact that these places may be open doesnt necessarily mean that they will be doing business. So i think that level of peopleinty, rather than taking actions, i think everybody is sitting on the sideline waiting for more clarification. Think is the you greatest misconception many are under right now as they look to this uncertain future . Sam i think that too many people are anticipating a kind of vlike recovery. You know, weve been through this terrible period. The. End inperiod is going to the world will go back to normal. I think that all of us who have isolated form, one form or another i mean, i havent shaken hands with anybody in eight week. I have no frame of reference for that. Thats never been the case before. So weve seen our whole lives change. I think your ability or that isod of forgetting going to take a long time. He who fails to learn from history is condemned to repeat it. I think we have a lot we are going to have to be learning about and remembering, and that is going to affect everything we do. That is why your opening question to me, answered you was saying it is going to take white a while. And it is not going to be to return back to where we were. Erik my grandparents were permanently scarred by their experience in the great depression. You are old enough to have known a lot about that generation. Using this is going to be some do you think this is going to be Something Like that . Yep. Its funny you say that area i was in high school in the 1950s. Even in the 1950s, which was 20 years after the end of world to come at five years after the ii,ian end of world war 25 years after the end of the scarred isrmanently exactly the right word. I think theres very little doubt that we are all going to be permanently scarred by having lived through this. Guy sam zell talking to erik schatzker. Of thats at the end conversation certainly to ponder, when you think about the great depression. The virus clearly has forced the European Union to take a long, hard look at the regions reliance on Global Supply chains and individual countries. Andalk more about this where we go from here, we are joined exclusively by phil hogan , the european trade commissioner, who joins us now from brussels. Think you for your time today. We really appreciated here on bloomberg. How will global trade be altered by covid19 . How do you see the changes coming, and what kind of effect do you see it having in the longterm . Shorti suppose in the term, what people will be looking at is how we can lift the restrictions that have been imposed because of this global pandemic. Understandably in the beginning, there was a lot of crisis management, and the temptation is always there to put on barriers and restrictions. So we have to remove all of those restrictions and return to an open, rulesbased approach. At the same time, i am sure every country will look at how they can look at their vulnerabilities in the context of this pandemic and how they are vulnerable at this particular time, in terms of pharmaceuticals and medical oreplies, and want to resh some of these materials and ensure local production. That is why we need some rethinking in terms of working together. I have been reaching out to the United States, reaching out through wto members in the last couple of weeks to see how we Work Together to have more speedy recovery than perhaps if we were working individually. Guy lets pick up on that. So you have been talking to, i would have thought, ambassador lighthizer in the United States. One of your key jobs before the arrival of covid19 was to try to put the 2018 trade truce that Jeanclaude Juncker negotiated back on track. What is the tone of the conversation you are having with washington right now . Is it m people to making is le toable is it amiab make that happen . What kind of feedback are you getting from washington . Last fewarly over the weeks, people have been concentrating on trying to save peopless lives, both in the European Union and the United States. What we are expecting in the next two weeks to get back on track. The mandate that we have in the European Union is to negotiate with the American Administration based on the 2018 mandate that still exists. We have been making some progress in the early parts of 20 20, and i am looking forward to makegaging in order more progress, hopefully in the coming weeks. Vonnie you have visited d. C. Several times, commissioner hogan, during that time. One of the sticking points at the time was agriculture. The u. S. Wanted eu to put agriculture on the table. That was firmly offlimits. Post pandemic, is it now on the table potentially . Phil we continue with the mandate of july 2018, and i think both the United States and the European Union are happy to do so. Were looking at the Industrial Products of the future with the commerce secretary. Theres a big agenda, and i think theres an open minded spirit to try and make some agreement here. I hope that the attitude of the toopean union will continue be constructive. I have invested a lot and trying to refresh the relationship with the United States, and the boesler lighthizer and i are certainly having a constructive relationship at the moment. Vonnie you did talk about vulnerability of supply chains. How can you have a less globalized Global Economy, and at the same time cooperate with the United States and with various European Countries to have a speedier recovery . Phil i suppose europe is looking at what we call strategic autonomy. We want an open rulesbased approach, fair competition that can be implemented by the wto, and we are doing a lot of deals around the world and freetrade agreements. Of them. Nt to do more at the same time, there are vulnerable sectors we have seen during this pandemic, particularly in the health sector. The brixon of metta supplies are important and essential for our the medical supplies are important and essential for our citizens. It is one of the areas we have to diversify, and we are going to do that, but that does not mean we cant do both. Equally, and balance to that, we have to have a rulesbased approach for the entire economy. Steel fit into that bailiwick, commissioner . You have been put under pressure by european steel producers to maybe look at cutting quotas on what can be imported into the European Union. This is kind of a legacy of the steel tariffs that were put on by washington visavis china and the eu. But you are now being put under pressure by eu steel manufacturers to make sure that steel quotas are cut area do you see that happening . Are you amenable to that idea . Phil we put a safeguard mechanism in place for steel and aluminum two years ago. This is now up for review, and i expect to make a decision by the end of june. We have to take into account the fact that a lot of product has been produced, looking for a home post pandemic and in the context of the economic recovery. I am sure that various countries in the world are looking at going into low costs to remove the surface product they have. But the safeguard mechanisms support reasonably well up to the time of the pandemic outbreak, and again, we are not going to delay making a decision to rebalance things in the context of the covid19 pandemic , and we will be making a decision before the fourth of july. Guy one of the other decisions youve got to make relates to the wto disagreement between airbus and boeing. The United States already imposed tariffs as a result of the boeing side of the ruling. We are about to get the airbus side of the ruling, but a lot has changed over the last few months as a result of covid19. I guess my question is a straight one. Are you in a position given the economic background at the moment to impose extra tariffs on the United States as a result of what the wto is likely to rule . Will you do that, given the economic background . Phil my courage is based around the fact that i dont agree with tariffs. I think we should reduce costs and eliminate tariffs where possible in order to ensure that we have our economy is recovering as quickly as possible area that is what i would like the United States and the European Union to do. We need to negotiate a settlement as well with airbus and boeing to remove this dispute from the agenda because , ats going on for 15 years a time when the airlines are in great crisis financially. That we have a different solution, which is to eliminate our tariffs, to make our economies competitive again, and to ensure that our economies recover more quickly. Vonnie can you really be in a position to illuminate tariffs given the economic backdrop, commissioner . Phil certainly i feel that the United States and European Union can look at sectors where we can reduce tariffs significantly, and we could start with the health area. The public are very concerned about the cost of medical supplies, equipment, and pharmaceuticals. This is an area we could start , and this is where like my did members of the wto would work the European Union to a knowledge the vulnerability we have just experienced and related to Health Related products. Tariffs on anated temporary basis. This could become more permanent if we actually worked together. Vonnie do you anticipate having problems with china . The u. S. Announced it was going to give an extension for some tariff exclusions for another 12 months. What about europe . It is a very distant situation now than it was a few months ago, when trade was all anybody had to focus on, and the game theory of it all was i can outlast you. Now the mathematics in the game theory is very different. Erik there was a lot of excitement phil there was a lot of excitement. This was celebrated when i was in the United States, and unfortunately for this deal, it seems that the pandemic is going to make a big difference in terms of its and limitation. In terms of its implementation. But at the same time, the United States, the European Union, and japan made a very important statement on how we were going to tackle foreign subsidies and the impact in terms of economic competition in the way it was affecting our companies in relation to competing in a fareway. We are now working in order to advance these particular statements to likeminded countries, and to deepen the cooperation in terms of how we of deal with these issues enterprises inc. Subsidized and competing unfairly. Has anopean union Ongoing Investigation in terms of china, and these issues like forced technology transfers, subsidization of state owned companies to compete unfairly, and generally the imposition of industrial substances across the board and so many areas of Economic Activity in china is of great concern to the European Union, and we would love to work with the United States in a more cooperative way in order to deal with these issues, and we stand ready to do so. You have talked about an end of 2020 target for achieving that accord with china. Is that still realistic given what youve just said . Phil the big issues that ive are very that wellknown to the United States and the European Union, like the industrial subsidies and the soes and technology generally, these are not resolved, neither were they resolved in the phase one negotiations by the united so theyso they rave are very much on the table. There are issues that will have to be discussed, and hopefully we can reach accommodation with china in the coming months. But we are engaged. We are making progress with china, and i hope we will reach a deal at the end of the year. But it will be substance overspeed, based on dealing with these issues in a very fareway. In a very fair way. Guy commissioner, thank you very much for your time today. We really appreciate it. Phil hogan, the european trade commissioner, joining us from