Security law over hong kong sparks outrage from the opposition. We will be live in beijing at the National Peoples conference with the latest. President trump, a pledge of retaliation. The hang seng leaves asian stocks lower as u. S. Senators lower rates. And the fed could hold further guidance until the fall. Bets on a boe journey toward up support for small business. We are just under an hour away from the start of cash equity trading in europe. We will take a look first at futures after the hang seng fell 5 . Youre a stocks, ftse, and dax futures all down one euro stoxx, ftse, and dax futures all down 1 or more. On the majorps European Equity indexes. In terms of u. S. Futures, halfpercent drops, basically, across the dow jones, s p, and nasdaq futures contracts. It looks like it could be a negative open, even before we talk about big budget deficits. Anna indeed. Lets get to some of the earnings. We get some numbers out of burberry, the luxury clothing business based in the u. K. , but with a substantial presence in china. Heading into the numbers, there was a focus on china and how sales on the mainland have been rebounding. They save yeartodate sales in Mainland China and korea are ahead of the prior year, of interest to anybody tracking the recovery trajectory for luxury goods in that part of the world. The company does say it is not in position to provide specific items for the full year 2021, and future Dividend Payments to be reviewed at the end of fullyear 2021. Matt, you were referencing u. K. Economic data in the headlines, talking about the possibility of whether we end up with negative Interest Rates in the u. K. We are also hearing some lines around the u. K. Budget deficit, the largest since modern record began in 1993. The budget deficit, excluding banking groups, stands at 62. 1 billion pounds in the month of april, a sign of the where governments spend to shore up their economies and protect their people from the coronavirus. Lets get to the Global Market picture. Its all about tensions between hong kong and china and what china intends towards hong kong. It is the stock market, the hang seng down by 4. 8 right now. It was down more than 5 for the session has china plans to impose its National Security law on hong kong. Asia in general heading for its biggest slide in a month. We also see, a little further along in the sovereign bonds column, some big movement in the indian side, on the back of a surprise rate cut coming through, underlining how Central Banks tried to deal with the fallout of coronavirus. Matt . Matt lets get the top headlines from the bloomberg terminal. The house will review legislation to impose restrictions on Chinese Companies listed on u. S. Exchanges. Speaker nancy pelosi stopped short of promising a vote. The Senate Passed legislation last week this week with overwhelming support from both parties. This illustrates pushback against china on capitol hill. Prime minister Boris Johnson wants to end the u. K. s reliance. N chinese imports as well he has ordered Civil Servants to identify the countrys unique vulnerabilities. The paper reports that this might feed into the u. K. s postbrexit rules. Hasident donald trump decided to withdraw from the open skies treaty, and arm control pact designed to promote transparency between the u. S. And russia. The president s citing violations from moscow, saying , we will pullre out. Says the u. S. Could reconsider if russia complies with the treaty. Global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. Anna . Anna matt, lets get into the conversation around global stocks. Asian stocks dropping, the bulk of the losses coming through in hong kong. The hang seng and msci indexes are on the biggest on track for the biggest decline of the year. President trump threatens to further escalate tensions between washington and beijing. Lets get a look with matt cudmore, who joins us from singapore. The reaction to this quite obvious to see an equity markets. I suppose we all felt how longlived this will be, and maybe some of that will depend on what we see from u. S. Politics and the reaction to this. Mark thats right. I think its the fact that you are going into a long weekend for many parts of the world. Its going to be low liquidity, so investors are nervous. You have this stock on a thursday, friday. It is a time when we are expecting official policy from china, because the mpc we have this long weekend. Investors want to do risk. Derisk. Hong kong has been hit by a perfect storm in the short term, especially as the mpc disappointed investors in terms of what it delivered in terms of stimulus. But there was a bit of a perfect storm for hong kong shares. That will probably last until after the weekend. I think next week probably will not see a continuation of must the protests are really bad on the weekend unless the protests are really bad on the begin. Matt do you not expect bad protests . Will the virus hold people indoors in terms of protesting . Mark im not sure if the coronavirus will impact it in hong kong, since they had such a successful job they have done such a successful job at containing the virus. I do expect protests over the weekend, but i think it is important to remember the hang seng index is already trading below book value, so it is already massively discounted. I think many people have discussed for months, even before the coronavirus, the general theme that china would take a harder line this year and cannot afford the protests to go on. All that conversation was put on the back burner by the coronavirus, and that we have that whole element again. Is the backdrop picture stock markets heavily discounted this story already, maybe not 100 , but certainly largely discounted. Weve also about the fact that china is doing better than many other western countries, and hong kong is doing very well. I think this is a theme where we are getting the news event which is kind of seeping into the process for many months. There is no more downside, but a lot of negativity is already present in the index. Even in a very bad scenario, it is hard for the index to fall substantially lower. Anna let me ask you about emerging markets. We have seen india go to the lowest since 2000 and terms of its Interest Rates. The central bank of india expecting the economy to contract for the first time in more than four decades, underlining how Central Banks in emerging markets are trying to take action to shore up growth as best as they can. Mark i think this continues the general theme of not just emerging markets, but we have seen every central bank around the world being very proactive. We know Central Banks have been proactive since the last prices, but they even surpassed expectations this time around. It is not just developed markets that can smash our expectations. Emerging markets, as well, can do that. One thing with this crisis relative to the last crisis is within the gsc, it turned into a situation where emerging markets had a hike rates after a couple of months because their currencies were weakening so much. This time, there is a different dynamic. Emerging markets do have the capacity to ease rates themselves. That is a reflection of several different things. It is hard to generalize because it is different by country, but external balances have been safer than they have been in some of the em crises at the start of the century. Theyve got more room there. Also, they are slightly more mature economies, so they are viewed in a different way. I think the fact that emerging can implement policy in isis and not have to positive. Matt thank you, mark. Remember, you can join todays question of the day on the mliv blog. How much longer can the gold rally extent . If you have thoughts, go ahead and reply. Become part of the conversation. I want to bring you some breaking news here on nissan, as we wait for earnings from the japanese carmaker. We see reports in the kyoto news that nissan is considering over 20,000 job cuts worldwide. It looks like nissan is going to join the pack of Big Companies cutting a massive amount of jobs. Yesterday we heard from rollsroyce cutting 90,000 jobs in the u. S. , so nissan is considering 20,000 job cuts, according to kyodo. Anna in the u. K. , some other breaking news. The Financial Conduct Authority extending the mortgage payment holiday by a further three months, so that takes us to the end of october. If mortgage payers are having trouble paying mortgages, they can ask up until the end of october for payment holidays. That is an extension being offered to mortgage payers in the u. K. Ecbext on the program, the planning to unleash even more stimulus. The central bank publishes the account of its last meeting in a few hours time. We will talk with our next guest. Matt welcome back. We are still about 45 minutes away from the cash equity trade across europe and in the u. K. , but we are looking at futures that are once again today down, indicating a drop of about 1 right now. The ecb publishes the account of its latest meeting in just a few hours. Analysts will be looking for any clues on whether the central bank will boost bond buying in june. Bloomberg economics is expecting an increase of 250 billion euros , after the governing council opted not to make any changes in its april meeting. Chief joined by economist at ubs. What do you think about the stimulus . Does it need to be adjusted . Know the Pandemic Emergency Purchase Program launched in march has an envelope of 750 billion. We know that by now, roughly 180, perhaps 200 billion has been bought. We do expect an increase in the billion to one trillion on the fourth of june as well, but i have to say, given that by now we have bought less than one third, it is not strictly necessary. The ruling from the German Constitutional Court has made the outlook more uncertain. We are not so sure in the ofrease coming on the fourth june. Anna thats interesting. I suppose there is increasing pressure if the ecb is a little distracted by the Constitutional Court ruling. They are increasing pressure on governments to do more. We have seen the Recovery Funded by merkel and mike brown macron, but it will take time to implement. Do we risk a crisis, in the meantime, for the euro zone . I think for the policy response, that was already on the table. I think we are good for now in the shortterm. We have a new sensibility from the European Investment bank. We have also launched a new one up lehman insurance fund. Everyone knows that the discussion of the Recovery Plan is underway. Its going to become located. But if unforeseen events do not happen, i think we are good for now. But i would not want to downplay the need that we really do make progress with the Recovery Plan. As you say, the Franco German proposal was very important. The European Commission is going to launch its own proposals next week, wednesday the 27th. Then the European Commissions proposals will be put together with all the others, including the Franco German one. I think that will be passed on to the European Finance minister for further discussion, and i think eu is will eu leaders will be in the position to discuss their plans at their summit four weeks from now. But i would caution that final decisions will not be taken before the second half of the year, because this Recovery Fund will be part of the 20212027 budget my which is not going to be launched until next year anyway. Its going to become located, and it will take a few more months to be seen. Matt that does not sound much like a bazooka. That does not sound very overwhelming. Reinhard, what kind of recovery do you expect from this . In china, we are seeing positive surprises in terms of consumers returning to purchases. Businesses with units in china are positively surprised with the rebound. What rebound do you expect to see out of the euro . Reinhard of course, china is a few weeks ahead of us in the covid cycle, so to speak. Yesterday we got purchasing manager indices for the euro zone. Pmis for may weakd a lot from the super levels we had in april. We are slightly above the march level, but overall still extremely weak. I think we can say this recovery is going to be very slow. According to our forecast, we will see a gdp contraction of at least 6 . We expect a recovery of 4 next year, but that would mean by the end of 2021, the level of gdp would still be at 1. 5 below the precrisis level. That means we would probably need all of 2020 22 just return 2022 two just return to the precrisis level. Some incorporates will go under and people will lose their jobs negative effects will be quite significant. Reinhard, thanks for joining us. Reinhard cluse, chief economist for europe at ubs. Snest. Icks the hornet residents call for protest. We are live in the capital next. This is bloomberg. Matt welcome back. We are just over 36 minutes, 37 minutes away from the cash equity straight across europe. But in china, we have seen a hornets nest stowed on hong kong. The premier has told the National Peoples congress that beijing will reinforce National Security in the autonomous region. Their remarks came after beijing announced dramatic plans to dissent into the citys charter. A critic has called it the end of hong kong. Joining us is bloombergs selina wang. Why is this Hong Kong Security law i thought some version of this already existed, so why is it so controversial . Selina china is signaling it is going to be bypassing the Hong Kong Legislature to pass this law, which has been pushing for many years. While we dont have the text yet, it is expected to ban sedition and subversion of the Central Government in beijing. The last time they tried to pass a similar law was in 2003, which sparked mass protests and the legislation was shelved. At a time when the world is preoccupied with battling the coronavirus, this could further erode hong kongs autonomy, judicial independence, and other freedoms that people dont have in china. There has been immediate backlash from people in the international community. A prodemocracy Lawmakers Said this erodes the status of hong kong has an International City, and they expect this status will be gone very soon. And it further inflames tensions between the u. S. And china, with two senators introducing legislation to punish chinese entities involved in this new law and penalizing banks that do business with them. That is on top of potential delisting of Chinese Companies from u. S. Exchanges. This type of rhetoric is only expected to escalate as we head into the u. S. President ial election. Anna we heard from President Trump just yesterday that the u. S. Will address very strongly any hong kong crackdown. Michael pompeo, secretary of state, his views on the degree of autonomy that hong kong enjoys in its special status, we will watch that conversation closely. Meanwhile in china, we have heard from the chinese leadership that they are stepping away from the strict growth target we had heard about before. What is that . Selina the target is normally the anchor of the countrys policymaking. The fact that they are abandoning this underscores the scale of the uncertainty caused by the pandemic as well as the damage that has been caused. It is notable because local officials really look to this their as a cue to spending and investment. It looks to coordinate diverse actors across the economy. But we did get figures in other areas. The target budget deficit was widened to more than 3. 6 gdp. We also had a boost in infrastructure investment, ¥3. 75 trillion in local bonds. The government also sent a target to create 9 million new jobs, lower than last years 11 million, but this focus on jobs is critical. More than 130 Million People have lost their jobs or been furloughed. Given this could lead to social unrest, it is critical for them to focus on creating more jobs. Anna i remember when the growth target was 10 , then 7. 5 , and now it is gone. Selina wang in beijing. Up next, we will stick with this story. One opposition lawmakers has this could be the end for hong kong. We will discuss whats next for the chiefwith economist at enodo economics. 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. Matt welcome back. Here are the stories we are watching closely. First off, the National Peoples congress, the annual gathering of chinas main legislature, has opened in beijing this morning, as we were just talking about. We are going to continue to cover this throughout the program. At 10 00 a. M. London time, easyjet kicks off its egm. Call ill feel they shareholders will field a call by the coowner. The ecb p. M. U. K. Time, releases the account of its latest Monetary Policy meeting. Finally, alibaba is set to publish earnings before the u. S. Market open. Is chinese ecommerce giant likely to report a year on year profit decline in the march quarter. U. S. House Speaker Nancy Pelosi spoke exclusively t