That really made an impression on markets in europe. Lets look at how we are faring in the United States because we are down here, too, though not by as much. The 10 year yield at 65 basis points. Crude oil has erased any gains at saw after the drawdown in inventories earlier. 5. 42now trading hunting a barrel for wti it is now trading at 25. 42 a barrel for wti. Fed chair jay powell speaking this morning to adam posen of the Peterson Institute in washington, d. C. He pushed back against the idea of negative Interest Rates in the United States. He urged monetary and fiscal policy makers to rise to the challenge in order to avoid unprecedented downside risk. Chair powell while the economic response has been timely and appropriately large, it may not be the final chapter given that the path ahead is both highly uncertain and subject to significant downside risks. Economic forecasts are uncertain at the best of times, and today the virus raises a new set of questions. Vonnie for more, we are joined by david rally of lupe asset management, their chief investment of bluebay asset management, their chief investment strategist. What was your take away from jay powells chat without imposing with adam posen, optimism or pessimism . David i think he was giving a realistic assessment of the outlook, and i dont think he was being overly pessimistic, but he was highlighting, correctly in my view, that the risks are very much skewed to the downside. I would actually share that view, and i think theres a concern at the moment, at least that i have, that markets are somewhat discounting some of those downside risks. Therefore,ht, so youre saying that markets are not pricing things correctly. Where are the dislocations most obvious to you . David i think when i look at the scale of the rally that we have had during the course of april, a big part of that rally both in equity and in highyield credit in particular was justified by the policy interventions, which took away some of the tail risk of a systemic financial crisis on top of the Health Crisis and economic crisis that we face. But i think now, we are getting to the point where the market is pricing a pretty strong recovery through the second half, and the return to precrisis output levels during the course of next year. That may happen, but i think it is worth bearing in mind that we are entering an easing of lockdowns in europe and the United States, which is actually happening at an earlier point in terms of the Coronavirus Infection curve than we saw in china and some other places, within asia as well. We are quite heavily discounting the potential for a second wave or renewed restrictions on economic activity. I think it is more just the skew it may makemeans sense to take a few more chips off the table and be more cautious. Vonnie is that enough of a discounting for the market . Are equities still to richly valued still too richly valued . David the s p rally in particular has been very impressive. 70 as taken back more than of the selloff in march. I think what is being implied in terms of future earnings, and if you look at things like dividend futures and discount those over the future, it looks like theres a bit of overshooting that has occurred. As we go into a situation where we start to understand not only the depth of the recession, but then how quickly we can start coming out there isthen i think some potential for at least a bit of a pullback. I think one thing to remember is that we are only two months into this recession, so it is actually pretty early into a recession and credit downturn. We often doi think get some further negative surprises along the way. Vonnie lets move to the u. K. The bank of england certainly has a job on its hands as well. We saw that i, data today which showed a downturn that Economic Data today which showed a downturn in britain, 5. 6 percent contraction. How long does that last, and what can the boe do . David i think the bank of england is quite likely to do more quantitative easing. I suspect it will increase the volume of purchases of u. K. Government bonds and potentially Corporate Bonds as well, either at his next meeting at its next meeting or later in the summer. Right now, one of the key roles of Central Banks is effectively to keep Government Bond yields low as governments to record amount of issuance. With the latest announcements by the u. K. Chancellor that he is support wagend the subsidies for furloughed workers , the huge numbers coming out of congress in terms of both additional stimulus, but also in terms of funding the existing programs in place, i think all of the Central Banks right now, it is about absorbing a lot of that supply and making sure that it doesnt push up the core rates across the economy as a whole. Vonnie what do you make of this burrowing i dont want to call it a row, but definitely a strong disagreement among the highest agencies in europe right now. You have the german khan will Court Members coming out and being very vocal in their opposition to the ecb. You have Angela Merkel saying she is going to respond to the German Constitutional Court, effectively perhaps doing what Christine Lagarde cant do or wouldnt be as effective as if the chancellor does it. We will have to see what the responses. Who wins here . Ultimately, i think the ruling by the German Constitutional Court isnt going to constrain the ecb in terms of what it has to do and needs to do, and i think again, theres a good chance that the ecb will extend its asset purchase its overallncrease size, despite what the German Constitutional Court has said about previous asset purchase programs. But i think youre right, one cannot dismiss the German Constitutional Court ruling because it actually goes broader than the role of the European Central bank. It is really coming into conflict with the European Court of justice, which is the institution that has the ultimate authority in terms of not only european institutions, but also enforcing european rules. If this is not resolved, that will have potential implications for the operation of the european single market, and economists do start to and economies do start to recover when we get on the other set of this crisis. So i think there are some real issues, and it highlights the challenges that face the eu and the euro area with this divergent of responsibilities and almost competing power centers. Vonnie it was really insane to read the oped today. It was one of the more conservative members of the court, but he actually called the ecb thinly legitimized democratically. That is really trying to take the ecbs knees out from under it. Can it go beyond what is doing already . Can it use other tools if it is already facing such a challenge in its ability to carry out these quantitative easing measures and other measures . David i think you are right that one of the big issues and big debates going on within europe at the moment and obviously relevant for investors is the issue of solidarity. Much of the debate has been around fiscal solidarity, providing fiscal support, which is, the cost of which is shared across all of the Member States rather than being born by each one individually. Now we have germany and the Constitutional Court actually challenging the most effective paneuropean institution in terms of its response to this crisis, which is the ecb. So i do think it is very unwelcome, but i also do think the ecb is not going to allow court member state or outside of the European Court of justice to stop it from doing what it believes it needs to do in order to meet its mandate. I dont think this stops the ecb from taking more action, but it andrly is very unwelcome, it clearly undermines the notion of european solidarity, and it is in stark contrast with, when we look at the u. S. , i think one reason why u. S. Assets have outperformed during the course isthe rallies in april because the policy response from the fed and also from washington in terms of economic policy, at least, have been much more coherent, much more broadbased, and much more effective. Vonnie david, fascinating conversation. Thank you for that. That is david riley of bluebay asset management. Lets get a check on global markets. Heres kailey leinz. Kailey it is a red day for equities across the world. Even the tech heavy nasdaq and the u. S. Have slipped into the red tech heavy nasdaq in the u. S. Has slipped into the red. Fed chair jay powell striking some fear into the heart of this equity market with his rather grim outlook about the u. S. Economy. If we close in the red today, it will be the second down day in a row for the s p 500. We havent seen back to back declines on the index since april 21. As we know, things changed dramatically in the last few hours of trading yesterday, with steep losses in the closing bell. The underperforming sector is energy, and also the financials, banks in particular. The Kbw Bank Index is down another 4 today, the third day in a row it has fallen, down more than 11 in that time. All of this talk about potentially negative rates may be weighing on those shares. Traders still betting on negative fed rates by 2021, even if powell says they arent considering them for now. Finally, just a few other laggards in the session today. Big energy down hard. Conocophillips down between 3 and 4 each. Gasoline prices slumped 57 in april, the largest decline on record. It shows just how low demand for fuel is at this point, and that is weighing on these players in todays session. Vonnie thank you for that. That is kailey leinz. Still ahead, a bloomberg exclusive. We will talk with jake heller, head of Technology Growth at kkr. He has just had a round of fundraising for the pizza app slice. This is bloomberg. Vonnie live from new york, im vonnie quinn. This is the european close on Bloomberg Markets. Let us get to the first word news. Heres mark crumpton. Mark president trumps former Campaign Chairman has been released from prison to home confinement over fears of the coronavirus. Paul manafort was serving a seven and a half year sentence for his conviction on financial crimes and illegal lobbying. Manaforts Attorney Says the 71yearold does not have the virus, but is at risk because of other medical conditions. Americans will probably get sanofis Coronavirus Vaccine before the rest of the world, if the drugmaker can deliver one. The ceo told bloomberg the u. S. Was first in line to fund the companys vaccine research. Sanofi says europe risks falling behind unless it seeks protection from the disease. The british economy has plunged into what may be its deepest recession in more than three centuries. Gdp fell almost 6 in march when the lockdown was imposed. ,t was down 2 for the quarter and things are expected to get a lot worse this quarter. The bank of england is forecasting a staggering 25 contraction. Opec presented a bleak assessment of Global Oil Markets for the second quarter. The cartel cut its demand forecast by about 15 . Opec predicts extra cuts by persian gulf producers will speed up the markets rebalancing. 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. David than 120 countries. Crumpton im mark crumpton. This is bloomberg. Banks cfo rce commerzbanks cfo still sees recovery ahead. On the results, we are pretty confident that we will see a recovery, and we have already seen that in the past weeks. That is one part of the story. The other one, we gave guidance which is clearly attributed to we corona crisis, where assume a ushaped scenario. To 1. 4 billion with nofore years end, second lockdown, which is a porton which is important. Vonnie joining us to discuss our bloomberge is opinion columnist. All of the banks are a little in trouble, and all are pretty much talking about changing the strategies again. Theres only so much strategy changing you can do as a bank, right . Reporter absolutely. What you have to take into account is their earnings are about 50 see a hit of compared to last year. He returned to the profitability they had last year not really priced in by the market until 2022 at the earliest, so clearly, a long period of for thosey institutions such as commerzbank, which were in the midst of a turnaround. The pandemic has only deepened those struggles, and made it even more compelling to accelerate the restructuring. Vonnie is there anyone for whom this is good . We saw again a bigger loss than expected at abn amro. We also saw Deutsche Bank resuming jog pots resuming job cuts. Can anyone take advantage . Elisa i think what we saw in firstquarter earnings was the emergence of some winners. Of course, this is only one quarter into the pandemic, and really one month into the pandemic, if you thing about when lockdowns occurred. Ubs very resilient. Some of the banks that have large disclosures doing very trading in the first quarter. Have theward, you uncertainty as to how quickly these losses will build up and how significant they will be, all of which is eating into profitability. I guess partly reflective of the flux ability of the flexibility banks are provided by regulators for capital appears to be well within what regulators demand, and that is giving them comfort that they wont need to support banks anytime soon. Vonnie exactly. Even as we have the ecb embroiled in a bit of a fight with nations, particularly germany, obviously the banks are also part of this dialogue that needs to be happening. , giventhe future negative Interest Rates, is there anything the bank can make money on . In the u. S. , the bright spot was ficc. Elisa of course, the banks have been making money on permissions and fees and payments, for example. Of course, that comes under pressure as people spend less generally. There is just less activity. I think some of the interventions we have seen from havecb in particular probably held off a little bit better than people feared going into the crisis. But certainly, the pressure on the top line is likely to go away. Vonnie thank you for keeping tabs on this as always. This is bloomberg. Vonnie live from new york, im vonnie quinn. This is the european close on Bloomberg Markets. Lets get a quick check on your latest business flash stories. We start out with amazon. Its delivery speed is returning to normal. Hadcompanys today pledge become several weeks for nonessential items. Those delays were starting to tarnish amazons brand. On sunday, it lifted restrictions on the month of suppliers could send to amazon warehouses. Analysts say if there is a deal, it is likely to face entice trust scrutiny face antitrust scrutiny. And americans should pay more for their meat. U. S. Suppliers making major changes due to the pandemic. Some production lines will be fully automated eventually. The likely result, higher costs for an industry that has been efficient at pumping out pretty cheap meat. Here in the u. S. , we are seeing down markets. The s p 500 down 1. 1 , the dow down 1. 5 , and the nasdaq has fully embraced the dark side now, down 0. 7 , having just into the green earlier on. Those Tech Companies not immune to the power over markets right now to the pallor over markets right now. The dollar index is stronger, above 100, as the British Pound Sterling gives up all of its gains against the u. S. Dollar. We got really terrible Economic Data out of britain earlier. A contraction of almost 6 , although it was better than anticipated. Of course, the equity markets in europe are also lower. The dax, the stoxx 600, and pretty much all others. The cac 40 down 3 . This is bloomberg. Staying connected your way is easier than ever. Youre just a tap away from personalized support on xfinity. Com. Get faster internet speeds with a click. Order xfi pods to your home in a snap. Or change your Xfinity Services with just a touch. All in one place. Youre only seconds away from all of that on xfinity. Com. Faster than a call. Easy as a tap. Now thats simple, easy, awesome. Up the stocks finishing dayton in european trading. We are close to our lows of the session. 40, the the paris cac ftse 100, they are all down close to 2 on the session. All sectors are suffering. We will get to the worst performers in just a moment. The British Pound Sterling also giving up any gains we saw earlier versus the u. S. Dollar and also versus the euro because we did see pretty dire gdp data showing a contraction in the 5. 8 which wasof less than expected but at the same time it is not a pretty picture for britain, even as countries around europe struggle. Germany being the latest to say it will try to reopen june 15. The german 10year gilts the ield theyear ye German Constitutional Court taking on the ecb. Various judges writing up beds ecb andg public on the Angela Merkel had to step in and say she would respond to the German Constitutional Court. Christine lagarde will not respond anymore more than the original statement disagreeing with the idea that the ecb can do what it is doing. Mollermaersk,ap one of the companies suffering. Its at the porter would be down 25 and there is no visibility for the container company. It is down 5 . Amro was one of the banks that showed how dire it is for the banks, upping credit loss revisions and that stop is down 8. 5 . That stock suffering on the back of that. It is the automakers that are suffering the most today in europe. Th