Lots of people start retiring retail value starts to drop your medically, as a result of which, air france is taking the 500 million euro hit on that. Vonnie suppliers like rollsroyce, talking to the jet engine maker earlier on, and every time a widebody plane aes away, rolls doesnt get reorder for that particular plane. The s p 500 up 1. 5 . Most stocks are higher in the s p, and all of the groupings in the s p are higher, but we do have about 50 or so stocks lower. To be honest, a lot of those are came out after target and said, look, i cant tell you what is going on with the consumer. I am just completely confused. Target upping its offerings of fruits and vegetables and cook foods, but really not understanding what the customer is doing about a parable is doing about apparel. The dollar index down to 99, testing the 99 mark. Lets not forget the fomc minutes later on, for what thats worth. Theres also a lot of chatter about negative rates, particularly out of england. The 10 year yield at 71 basis points. We got Oil Inventories earlier on. That gave a boost to oil. But we are also seeing gold go down to its gains the last few sessions, trading close to 1750. Has trusting things to say about gold. As you say, the negative rates story front and center. Bank of england governor Andrew Bailey says the lower bound for Interest Rates is under active review at the bank of england, and he would not exclude the idea of taking borrowing costs to zero in the u. K. It is a live debate in the United States, of course. Chief joined by the Market Strategist of hsbc ofvate bank, will himself hsbc private bank, willem sels. In the u. S. And the u. K. , the debate is now live. Do you think that the gilt market could see significantly lower rates from where we are now . The debate is live in the United States. Do you think either of those countries will go down the negative rate route . Willem the Bigger Picture i think is that you are going to have very low yield environment for a very long time. The fed is going to be on hold for several years around the 0 level. We also think that the structural low yield environment is here. Our clients are into camps are in two camps on whether higher debt and liquidity will lead to inflation. Yields, thatlow obviously supports credit futures, but they are youre going to get a lot of differentiation. The fed needs to stick with investmentgrade Higher Quality both in the developed and emerging markets. Guy where does that ultimately take you . At some point, youve got to right size your portfolio. Where am i going to generate yields around the world if weve got rates stuck where they are . Equities dividends are disappearing as fast as anything at the moment, and yields are going lower and lower. Where does my portfolio generate returns . Where do i actually get that kick from . Willem that is the big question. Clients have a big problem with growth, low income, and high uncertainty. Frequent frankly, we already had that the start of the year, but it has just intensified. Investmentgrade yields are very low, but in the short term, i think it is still a wiser decision to stick with that because we are going to have somewhat higher defaults, and yields can still reprice. You can do it in a smart way and not overreach it you have the dividend stocks that have become much more challenging, which was a very popular trade with private clients, leading to the haves and havenots of companies, depending on their balance sheets. Popular area to reach for yield is on the real estate side, and there is wally landscape has changed, looking for differentiation. The answer for some people is to surprise the credit market, but thereto, we will have differentiation a few times during this interview, i think. Vonnie youre more them up them to. How often do you recommend rotation these days . Weve got the vix down to 28. Is it time to buy and hold a little bit more now . Willem we actually had a meeting today thinking about this question, which we also get from clients who are in technologies, in stocks, and all of those have become much more expensive. The question being, is there something where i should start trash,nto the dash for or reach selectively in those sectors that have been left behind . I think it is probably still a little early to do that. There are opportunities for stock pickers in those areas that have been left behind, but they will be quite few and far between. I think for the moment especially, we are still in the midst of getting negative data. We are still in a period where earnings have to continue to be downgraded by the analyst consensus. I think it will be difficult for the cyclicals and lower quality areas to rally in a sustained way as long as you have those negative headlines. Vonnie how do you think about the covid19 premium . Is there one . Is there one per asset class . How do you even calculate this . Willem i think it is impossible to do, except for the fact that one can say, yes, this sector should be better positioned than the other one. It also depend on how far your investment horizon is. I think in the very short term, what you need to do is build resilience portfolios over the next few months to weather that ushaped recovery and uncertainty, and you do that through diversification into investmentgrade gold and into alternative assets to manage that volatility. You do it by being in defensive sectors, to manage the slow recovery, and then the uneven nature comes back to differentiation. I think it is very difficult to put a price on that. ,f you look at the longerterm the longerterm, which are the countries and sectors that are. Ellpositioned for the future emerging Market Countries are very differently positioned because of where we are in the covid curve and the stimulus they can put in the economy from a monetary and fiscal perspective. How technologically advanced are they, etc. So there are very so they are very important to differentiate. Guy one of the key questions i think a lot of investors are going to try to figure out is if states are going to trough in this quarter. If it doesnt and if we start seeing the data rolling over into next quarter, and potentially the quarter after that, that is a very different scenario than a lot of people are pricing in right now. What is your sense of what is happening . The u. K. Chancellor was warning yesterday that we are not going to see the kind of bounceback people anticipated. That government stimulus is going to be withdrawn. We have seen it in the United States as well. What happens at that point . Are investors fully pricing that risk . Willem if you go back three weeks or so to the conversations i had with trying to convince people that we werent going to have a v shape, that we were going to have a ushape, now clients are asking me why we will have a ushaped and not a lshaped . The level of conviction for many people has been reduced. What you also see is those that have their own business that they run, they are seeing the negative impact on their business and therefore tend to have may be more of a negative view than those that are pure investors, and obviously see what is going on in the markets and have that view of global liquidity, trying to push asset prices higher. I think this is the difficulty, that it is not only about the depths of the fall and how much are we going to recover, but also the duration. The longer the duration, the havecompanies are going to profits,f negative which is going to be difficult, and governments can stimulate less and less. Guy thank you for taking the time to join us today. We really appreciate it. Sels joining us from hsbc private banking. A quick look at global markets. Lets get the details with kailey leinz. Kailey it is a risk on wednesday for sure. Optimism about reopening economies seems to be dominating the narrative, especially in the u. S. , where you have stocks higher between 1 and 2 . That is outpacing gains in europe, although they are in the green as well. The msci world index did close today just a touch lower. It really is a u. S. Outperformance story this morning. What i would note that the u. S. Has outperformed throughout this extended market rebound. Up, outpacing both the stoxx 600 and stocks globally. You can point to unprecedented amount of fiscal stimulus, but we also have to consider how those are twoed technology. Today it is the more cyclical sectors leading the way specifically. You are seeing that play out in individual names as well. Some of the most severely beaten up stocks are on the rebound today. You have the likes of mgm resorts higher by about 6 , and peers also rallying as states begin to move to reopen casino doors once again. Also have United Airlines higher by 5 on some signs of air travel demand picking up. The ceo was saying earlier that every day, he is getting a little more optimistic. Disney also higher by about 2 . I want to end on one stock that has not been seeing the selling pressure many of these names have. That is amazon. It is posting a modest gain today, just about 1. 3 , but that is yet another record high. This stock has been up six days in a row, 12 of the last 13 sessions. It has really been the poster child for stayathome stocks and has done well even on down days, but continuing to do well on this risk on day. Vonnie thank you for that. That is kailey leinz with our market deep dive. Coming up, we are going to hear from guys ceo with jetblue ceo roman hayes Ceo Robin Hayes. That is coming up. This is bloomberg. Guy from london, im guy johnson, with vonnie quinn in new york. This is the european close on bloomberg markets. Jetblue announced today it will extend its social distancing policy at least through july 4. The airline will continue to block middle seats in rose where parties are not traveling together. It will also continue to require. Ace covering for customers i talked to Ceo Robin Hayes about how he sees demand developing from here. Since the beginning of april, we have been bumping along the bottom. We are now bumping off the bottom. One thing i look at every morning as the tsa data which shows how many people go through the checkpoints the day before. As an industry, we are seeing about 8 to 10 of what we would normally see, so we are deftly seeing more improvements. We think in june, theres going to be more demand for flying from may. Again, we are very cautious, but we expect to fly our june schedule probably between 70 to 75 down of what we normally fly, whereas in may, we were flying 80 to 90 down from what we normally fly. Guy and what kind of traffic is it . Is it the kind of visiting friends and relatives traffic . Is it leisure traffic . Is there any Business Travel . Theres still a lot of essential workers flying around. Reticle personnel, people in the distribution business. Definitely some visiting friends and family. People returning back to the just before this pandemic broke. It is a real mix. We are also seeing into the summer some small interest in vacation travel as well. We are talking to a number of vacation markets, particularly the caribbean, to understand the reopening plans. Guy you dont see a lot of business traffic. You have certainly been trying to change that over the last couple of years. Do you see business coming back in anything like the same way you did before . I think business will come back more slowly. I think we are all finding things like this work a lot better than we thought. We are about 80 leisure, 20 business. I feel good about where jetblue is. We have a largely domestic network. The International Flights we have tend to be close to home. I think theres going to be concerned for a while, people traveling to far from home. I think we are going to see some different quarantine rules put in place around the world that are going to confuse people. But i think probably on business mayflywhere we eight to 10 a day, we may fly three to four. Demand . T about do you think it will come back in 2021 . Late 2021hink it is that demand between europe and the u. S. Should be largely back to where it was. We are going to have the same problems of Legacy Airlines gouging people with very high fares. We still see great opportunity for us to come in and make significant Price Reductions to make traveling a horrible. Traveling affordable. Guy when you look at what is happening with that trans allete story that transatlantic story, a number of airlines have gatwick andom heathrow. Do you see extra slots becoming available . Robin we see a path into more than one london airport more than i did then. Guy and you see what is happening with the legacy carriers. Michael oleary has been very outspoken on his perception of what is happening here. He doesnt see this as being a level Playing Field in terms of the ada being handed out to the likes of potentially of the aid being handed out to the a of potentially batons potentially lufthansa. Robin Congress Passed the c. A. R. E. S. Act, and we received payroll support assistance, as did other airlines. To pay ouren used people and keep our people on. Jetblue hasnt for like hasnt furloughed anybody. We kept everyone on the payroll. That commitment lasts through the end of september. When the economy comes back, the Aviation Industry is so important to help businesses and help people get going again. If you furlough everyone and there is no one around to fly the airplanes, it will just hinder the recovery. So the industry in the u. S. Is very thank full for that. We are very thank full for that, and ready to serve when things get going again. Guy what happens in q4 if things dont get going again . As you say, you run until the end of september. What then . If we havent seen a pickup later this year, how do you react . How do you reposition the airline at that point . Robin we have always had a low cost structure. We have always been very careful about how we plan for growth. We have a relatively simple, as i said earlier, a net worth largely u. S. Domestic. International tends to be caribbean, central and a little bit of latin america. We dont have any widebody airplanes. We do believe that this is the business that will come back first. Having said that, i still think it is highly likely that when we get to october, we are going to be a smaller airline, a smaller industry. We are going to attempt to do everything we can to manage that through voluntary means. Jetblue has never furloughed a crewmember in our 20 year history. We are proud of that. We would like to continue that. We also recognize that we are going to be smaller. We have had Great Success already, about 14,000 of our 23,000 cream embers have taken some form of voluntary time off. 23,000 crewmembers have taken some form of voluntary time off. Guy if it came to it, do you think you could see yourself from certain cities in terms of the network you are operating at the moment . There is a people effect. Is there a Network Effect and an offering effect in terms of what the business could ultimately look like . Guy that is a great question. We certainly have no plans to withdraw from meant. I think what it is going to look like is the lesser markets where we mayfly once a day, we will be flying maybe three to five times a week. Business markets where we see six to 10 flights a day, maybe we will fly four to five times a day. I dont see any longterm changes to the places we fly. I feel pretty confident that everywhere we fly today will bounceback eventually, albeit with less flights for a while. Ceo robin hayes talking to me a little earlier on about how this business comes back and how important it is ultimately to the u. S. Economy that it does. We are going to carry on the conversation. We are counting you down to the european close. This is bloomberg. Guy four minutes or so until the end of trading here in europe. In some ways, a more defensive kind of bias in some respects, but actually, in other respects, more of a growth, risk on kind of five. Equity markets are generally higher, tracking higher since the gecko. Weve got to since the getgo. Weve got technology up, oil and gas up. Follow. More details to european close is next. This is bloomberg. Guy 30 seconds to go until the end of regular training. We find ourselves up. The 600 is trading near session highs. At session highs as we approach the close. We are up just over 1 . Three point 23 323 is where we are training now. Lets take a look at how it breaks down across europe. There is more dispersion in terms of how individual markets are performing around europe, as there is when it comes to what is happening with the sector story. Up ande up 1. 2 , the dax continuing to outperform 1. 54 and the cac 40 is up. 9 . Not massive differences but worth paying attention to. Sectors, lets break it down. It does not feel obvious risk on, risk off from a sector breakdown point of view. The insurers at one end getting knocked around. Some of these are individual idiosyncratic stories, worth paying attention to. You see the oil and gas sector bouncing back. Higher oil price, which is part and parcel to that. Utilities are also kicking up and doing relatively nicely. Stocks rebounding up there march lows. Worth paying attention to. Anyway, lets move on, a final quick look at what is happening with the individual sectors, the individual stocks. Marks spencer looks better than the market anticipated. That stock is rising. Quiteroyce initially not sure what to make of what was announced in darby, but up to. 8 now. now. Oles up 2. 8 demand for aircraft falling. That needs to be reflected into the big tier one suppliers like rollsroyce. Renualt up 6. 34 . Saying the government would take an uncompromising position on plant closures. That twoo interesting of those involved in the escape of carlos ghosn, two of those were arrested in boston earlier on. A bit of a tangent when it comes to what is happening. Vonnie i see that. The father and son. Light on details as to how authorities think they might be involved except to suggest they did help carlos ghosn escape from boston to lebanon. We will hopefully find out more about that because it is an interesting story that boston would have been involved in some way. He was captured in japan originally. Lets get the u. S. Markets. The s p 500 up 1. 5 . All of the major groupings are higher, but not all stocks are higher. The market seems to be taking some solace from the fact that not all retail earnings were awful. There was good news out of those in mixed news from target which sounded the news. The ceo suggesting he does not know what is going on with the u. S. Consumer,