Court in germany. I really fascinating spiders web that has been woven. Here in the u. S. Come of the s p 500 up 1. 5 at 2886. A risk on tone in the market as you hear about tariff exclusions extended for up to 12 months on some chinese goods. Also oil rallying. It got up to 30 a barrel earlier. Yesterday, we spoke with one of the Texas Railroad commissioners. Wasaid that prorationing dead on arrival, but that permian producers could ration themselves. That is what we are seeing today. They have cut production today, and we are hearing that others will cut production in the next few months. We are also just getting a headline from that regulator meeting right now. Texas Oil Regulator asks producers for ways to reduce flaring. As we all know, following the story, flaring was one of the ways that Oil Producers got rid of the excess oil coming out of the ground, but it was not going anywhere. Of the regulators is asking producers for ways to reduce flaring. Crude is now trading at 23. 50 a barrel, and the energy index is the best performer given what i just said. We have a bit of a stronger offshore yuan today with pressure on china, and that story has just come off the boil a little bit. Lets get back to that story you were talking about when it comes to the ecb and the german court. Basically, the message is you have three months to fix your 3 trillion quantitative easing program, but certainly that is the message from germanys top courts to the ecb. Thatudges basically ruling some parts of the central bank qe program arent backed by European Union treaties, and the german authorities, and this is interesting, should have challenged it. Now, the ruling does not stop the ecb buying bonds, but the governing council are going to meet at six a in frankfurt tonight to debate the implications of the news for the ecb. For more now, we are joined by mike bunning, hsbcs senior fx strategist. At the very least, this ruling from the German Constitutional Court does create uncertainty around the ecb qe program. That program is absolutely critical in terms of where the european economy goes next. From an ethics point of view, what do you thing it means from an fx point of view, what do you think it means . Aminic i think it is challenge, clearly. Does the eurozone have the same flex ability in terms of policy maneuvers as other Central Banks . Lack ofbviously has a fiscal union. It does have some monetary firepower, which it has used. But obviously there is internal debate, for want of a better word, and some people might use a stronger word than debate, but there is meaningful discussion within the eurozone about what the right approaches. Clearly, some countries, germany, austria, finland, have been more opposed to successive easing and much bigger fiscal stimulus, whereas the southern European Countries in general and periphery states are more inclined to get on board with it. That is the crux of thinking that they will probably figure , it is but actually about the underlying problem, the lack of fiscal unity for the monetary union. That is really the problem. Guy as you say, that is the issue right now. Seemiscal side doesnt to be stepping up in the same way as in the United States. Even the fed is doing more than the ecb. One of the thoughts from the ruling today is that it is going to make it harder for the ecb to do more than it has done thus far. Is that the correct way of thinking about this . Again, applications for the Foreign Exchange market if that is the case. Is the ecb going to find it harder and harder to do more qe, or at least to put new policies into play in the same way the fed is . What are the impartations . Dominic its all about the proportionality, if the ecb can argue what it has done is proportional in regards to the targets, and they can continue what they are doing. That becomes harder and harder the more you do. So i think it is going to be harder for the ecb to some degree, and that to me is the problem. For the euro, what we need to start sinking about across fx in general, we are, at some point in the near future, owing to be thinking how we get out of this, and who is going to be able to recover fastest. If you cant use your fiscal and monetary toolbox to the full extent that others can, can you call your way out of this problem . Youre going to see big increases in debt levels, massive deficits across the world. At some point, the market is going to actually have to say who can afford this, who can grow their way out of this problem . In europe, i think it is going to be harder because of that lack of flux ability lack of flexibility. Market world, the fx would be focused on fiscal pressures, and erupt, not having that fiscal flexibility, would put pressure on the euro and that slow ushaped recovery. The germanlain why Constitutional Court has jurisdiction here, and why the italian version couldnt come up with a different decision and weigh in, or the french or the spanish. Dominic it is what the bundesbank is allowed to do, effectively, the german central bank. , there might be a way around that technically, whether one of the other Central Banks can step in and by german bonds. Who knows . But i think the point here for the fx market is it creates that uncertainty and shines a light, and even bigger light, on those differences of opinion and differences of approach, and really suggests it is going to be very hard really for europe to come together and figure this out. At some point in the future, we would expect the European Union, the euro zone to get there in some way. It may not come up with an everlasting solution, but it should be able to kick the can down the road. We have seen that time and time again. In 2012, in 2015, and this would be another example where the market has to start pricing in the risk of some kind of eurozone breakup, even if we never actually get there. That is the challenge. Vonnie the timing couldnt be worse really with this pandemic to deal with, and the ecb expanding its toolbox and the programs it is putting in place. Does it put pressure on the ecb now to come up with something within three months, or for individual countries to maybe rewrite the treaty . Willic i think the ecb find a way around it. That is what it looks like in terms of the overall sentiment. It is hard to argue that the german court is going to really pressure onso much the ecb. I think really, this is almost saying you need to make sure that what you are doing is not monetary financing. I think the ecb can justify that in terms of what they are doing, whether because of the way they are conducting qe or because of windntention to eventually the Balance Sheet down. It comes back to the proportionality argument. We are going through an unprecedented crisis, and in terms of what the ecb is currently doing, i think they are going to be able to argue what they are thinking there seems personal in that sense. But the technicalities that are going to matter, i think it is all about the certainty they create. Guy just a final quick question. Over the last couple of minutes, the u. K. In the u. S. Have announced a formal launch of trade talks virtually. The first will last may 6, and the idea is that these will be negotiated at an accelerated pace. Given that it looks unlikely the u. K. Is going to ask for extension on the brexit talks with the eu, does that change in any way the perspective on what happens next with sterling . What expectations are builtin regarding a trade deal with the United States . Think sterling at the moment, nothing is priced in either direction. I think the moves have been driven by the overall risk on risk off dynamics. We havent really seen people talking about brexit or anything else. But once we get to the bottom of this crisis, those issues are going to start to come back into play. If you are going to see effectively a hard brexit, a wto brexit at the end of the transition period, that would on sly weig sterlingh obviously weigh on sterling. So it is going to be about assessing exactly what the benefits are of any given trade deal. Obviously this is in the very early stages, so i think it is too early to say specifics, but clearly into q3 and q4, questions around brexit and how the u. K. Deals with that. Guy dominic, thanks for your time. Stay safe. Dominic bunning, senior fx strategist joining us from hsbc. Lets see what is happening more broadly in the market. Here with the detail, taylor riggs. Taylor equity markets staged a late day rally, and that optimism is continuing into todays session as well. New york and california governors talking about marshall plans to reopen. You can see that throughout all of the markets. I want to talk about the 10 year treasury here. I mentioned yesterday we were highlighting the range between 54 and 78 basis points. A lot of this is coming on new treasury supply to fund a lot of the government stimulus programs enacted. You are hitting another high. Look for yields to backup even further to a 75 or 78 basis points. Flooding up the board again, all of the talks about reopening means that crude continues to extend its gains. Wti up for about five straight sessions. Energy stocks are the only sector up more than 2 . Finally, norwegian cruise lines tanking as much as 15 after telling investors it has substantial doubts it can continue operating. L brands on its termination deal with sycamore. Wedbush saying that is a bitter pill to swallow. And meet shortages are pressuring wendys. 18 of their units are out of beef. Also, beyond meat will be reporting after the bell, so all of that filtering in through the negative action we are seeing today in those market. Vonnie taylor riggs, thank you for that. Coming up, our interview with bnp paribas ceo as the bank warns that fullyear earnings will take a pounding. And on the halfhour, we will focus on the auto sector. Our guest is demian flowers, automotive head at commerce bank. This is bloomberg. Vonnie live from new york, im vonnie quinn, along with guy johnson in london. This is the european close on bloomberg markets. Lets get a check of the bloomberg first word news. Heres ritika gupta. Ritika president Trumps Campaign is focusing voter attention on its prediction that it will be a rosy post coronavirus world. Polls show americans broadly disapprove of the president S Performance managing the virus outbreak, so now he will campaign on the idea he can rebuild the economy better than joe biden. British Prime MinisterBoris Johnson is running into criticism from both allies and opponents. Neither are happy with his coronavirus plans. Lawmakers from Johnsons Conservative Party want him to ease the nationwide lockdown. Labor unions and opposition politicians want 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 member governments. The court claimed that the bank overstepped its bounds. Oil is on its longest winning streak in nine months. Crude is up for the fifth day in a row. There are signs that the worst of the supply glut may be over. Theres only been a modest rising inventories at the delivery point for wti oil. 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 . Guy thanks very much, indeed. Frances biggest bank has warned that fullyear earnings will take a pounding from the impact of the coronavirus. The warning from bnp paribas was significant. They have been hit by three main andors associated with it, there is significant provisioning that goes along with it as well, though not as big as in the United States. Last night, i talked with the machenil. Lars risk backed upof by 500 million. The second effect is a oneoff related to to italia investments in the p l. They went down. This is a negative effect that would normally pay for that cut when the market returns. The third impact of covid19 is when it comes to the decisions that have been taken by authorities to strongly recommend that dividends would be paid, which has an impact on our equity and derivatives activity. Those are the impacts that weighed a bit on the results. Guy do you think we will have to see further provisioning . To give you a sense of what you think the trajectory of the nonperforming loan curve is going to look like. It, wef you look at have seen confinement that has been happening. That is what is weighing. The question is how we get out of this thing. So in france, this will start as of next week. A lot will depend on how the confinement will work. This will be phased, tapering up but towards normal by the end of the year. So it will all depend on how this one goes. It is just a tad too early to say what the impacts will be. It will really depend on the speed at which this happens, and if there is not a next phase or a next step in the crisis related to that, it is just a tad too early to say. Guy but nevertheless, it looks like any reopening will be gradual and slow, and is likely to have lasting effects. We are starting to see governments around europe as theyng guidelines bring workers back into facilities. Given that, it is likely that economies are going to be operating at or below potential, and smaller buddies are going to find it harder to deal with those requirements Smaller Companies are going to find it harder to deal with those requirements. Loan lossl like provisioning against those smes will have to continue even further . Lars if they were good in february, we continue to see how they will be into this period where covid is active. Normally, in the majority of European Countries, there are guarantees from the state that will get them through that period. Then the question is how they will sail through the period thereafter. Will they pick up back to normal . Will they pick up less, more . In our view, that pickup of the economy back to normalization will be happening at best buy the end of the year, and therefore at best by the end of the year, and therefore a return will not be until 2022. Guy madame lagarde is making a large amount of cheap money available through the tltro. What are your expectations about how that system is going to work, how you are going to access it, and therefore play a role in the transmission mechanism which the ecb is so keen to make sure works at this point . Lars what you see is there are a lot of steps being taken by the supervisors to ensure that angst can play their role because back into the crisis of 2008, banks were at the heart of the crisis, whereas now, banks are at the heart of the solution. That means banks shouldnt be suffocated. They should be able to transmit the money, and basically be able to play their role. That is what you see, which is taking place. There are some changes in the requirements so that banks can they arer role, and being taken so that banks can pass on the money into the economy. So you see that all of those steps are being taken for banks to play that supporting role to get out of this pandemic. The cfo of bnp paribas talking to me about the companys results after they were published. What are we dont talk about next . We are talking about the auto sector, coming up. ,e will talk to demian flowers automotive head at commerzbank. Thats next. This is bloomberg. Vonnie live from new york, im vonnie quinn, along with guy johnson in london. This is the european close on bloomberg markets. Time for a look at some of the Business News on the bloomberg right now. Another sign of how coronavirus is hammering the auto industry. Fiat chrysler posted net loss in the first quarter, deliveries plunged 21 , and the automaker withdrew its fullyear guidance. Fiat chrysler says it will restart when conditions allow. Marathon petroleum took a 12. 4 billion charge in the first quarter. That was the reduced value of the business in the wake of the coronavirus pandemic that reflects the reduced value of the business in the wake of the coronavirus pandemic. Marathon says it is also cutting spending by 30 . Drugmakers have been working with regulators to speed up to fill times. Normally speed up development of times. Pfizer is looking at both safety and the immuno response from therapies. That is your latest Bloomberg Business flash. Guy quick look at where european markets are right now. We are heading into the close, at session highs. We got higher first thing, then dipped before climbing back in the afternoon to where we are right now as we are going toward six lows. Ftse is up quite nicely, but the dax outperforming the cac 40. The oil and gas sector very much front and center today because the price of crude is rising, but also we had numbers coming from one of the best performance stocks here in europe, up by 8. 5 . Details to follow on the european close. This is bloomberg. [ sigh ] not gonna happen. Thats it. Im calling kohler about their walkin bath. My name is ken. How may i help you . Hi, im calling about kohlers walkin bath. Excellent happy to help. Huh . Hold one moment please. [ finger snaps ] hmm. The kohler walkin bath features an extrawide opening and a low stepin at three inches, which is 25 to 60 lower than some leading competitors. The bath fills and drains quickly, while the heated seat soothes your back, neck and shoulders. Kohler is an expert in bathing, so you can count on a deep soaking experience. Are you seeing this . The kohler walkin bath comes with fully adjustable hydrotherapy jets and our exclusive bubblemassage. Everything is installed in as little as a day by a kohlercertified installer. And its made by kohler americas leading plumbing brand. We need this bath. Yes. Yes you do. A kohler walkin bath provides independence with peace of mind. Guy 30 seconds to go until the end of regular trading. This session is being driven by the oil and gas sector, plus results around europe are helping out. Let us look at how this has developed. We were a higher first thing this morning, and then we dipped. As the afternoon has progressed we moved up toward session highs around 2. 12 percent. The dax and the cac in paris outperforming the paneuropean benchmark. We have done well. It has been the