Kong which has galvanize the beltway and the press. We will be seen much more of that, im sure, through the day. Statements by the administration, the condemnation. I will point out that the idea of will we see protests this weekend . Francine im looking forward to catching up with selina wang shortly. Lets get to bloomberg first word news in new york city. Top hong kong activists are calling for protest. The National Peoples congress is expected to pass a legislation that would force for kong to implement laws active treason and subversion. For the first time in decades, china has abandoned the practice affecting annual targets for economic growth. Instead, it will shift the stimulus focus with jobs. U. K. Posted record budget aticit last month, standing 76 billion. There is an unprecedented amount of money to prevent the clash crash of the economy. An executive at oxford has recruited more than 10,000 people to take part. The u. S. Has pledged 1. 2 billion towards the vaccine development. Quicktake by bloomberg, powered by more than 2700 journalists in more than 120 countries. This is bloomberg. Tom and francine . Bonds,uities, currencies, commodities. The vix moving back well out over 30. Nevertheless, risk off with yields lower today. All the usual attributions seen a. Gold is not record highs, but it is rallying today. Francine . Francine i was also talking about gold earlier on. Is going on at what in china and hong kong. Bit of movement when it came to gold. Stocks are sliding. Treasuries are climbing. Oil is smashing a fixed win streak. There is a National Security law coming on the heels of the protests. Lets go straight to selina wang in beijing. Exactly why is this controversial and why are they trying to pass this law now . Selina watchers say it is surprising timing for china to be so assertive. But other leaders around the world are distracted with the coronavirus pandemic. This is time for them to do so. This is highly contentious. The last time to push this bill was 2003. Thea says this is ensuring prosperity of hong kong. This is the end of hong kong as we know it. It is fundamentally eroding independence, autonomy, and other freedoms like freedom of expression in hong kong. Milesong kong is 1200 south of beijing. But given these announcements, how far away is it . What is the emotional attachment of the federal government in beijing . How distant is it . Selina it is very close to the territorial integrity through china. You heard statements saying this is an internal affair. They dont want it to be disrupted in terms of the National Security law. Thatsay it is nothing would be out of the ordinary in terms of other countries efforts to secure their safety. What it does risk inflaming tensions with the u. S. Trump says they could react forcefully. It would punish chinese do business with them. A lot of experts say that frankly, the u. S. Doesnt have a lot of leverage over china. They are probably going to continue to push ahead with this. When do we know exactly how much protest there will be . Covid19 the middle of and people possibility to protest is affected. Ability to protest is affected. Selina people in hong kong are calling for more street protests. It heightens the risk. We could see more of these protests when there was a first attempt. Arguably, we could be seeing it very soon. But it is very hard to say. Tom the distinction here, folks, is some bull. It doesnt have anything to do with the Hong Kong Government. This is the National Peoples conference. Various and the sundry chinese lined up. Everybody has on their different ethnicity to show that it is a Different Group of people. The president walks in with the premier and everybody collapse. I get the show, the pomp and circumstance. What happened the day after the npc when everybody goes home . Tom, this is a very ceremonial and very large showing hows powerful the communist Party Leadership is. It is trying to show signs of strength to the party and also to the people. While it is seen as a rubberstamp parliament, it does way with a large amount of significance. With a large amount of significance. The gdp target that we did not get this year, it is important cue for how people handle investments. You will see the country enact many of these policies that have been discussed. No the budget deficit will be widened to 3. 6 of gdp. In the wake of the financial crisis, you see a massive increase in infrastructure investment. With the focus on technology investment, they will be paying for that with special bonds. Jobs,r is the creation of given rising income and rising wages. They want to create 9 million jobs which is still quite substantial. Francine thank you for the update. Selina wang in beijing, joining us. Coming up next, the blackrock Portfolio Asset manager will be joining us. We will ask about the u. K. This is bloomberg. Francine this is bloomberg surveillance. We were talking about the hong kong protest, and this is what all of this means for markets. The former manager from blackrock and when you look first at the protests in hong kong that they are planning, this law how much more angst will it put on markets that are already fragile . Difficult for marcus to try to price increasing geopolitical risk and at the same time deal with the unprecedented covid and social crises. I think a specific example of markets are at the extent of u. S. China tensions. But we should not becoming this a trade war anymore. We should be calling this fullspectrum strategic competition. I think we are inevitably going to get some kind of u. S. Response to these actions. Think assets, i think it is a lot further to go with the deescalation of u. S. China tensions. Youcine do you care or do not care as long as the fed is there . There is an important longterm contributor. We are pretty cautious. Think the fed has provided enormous support to markets. Think it wouldve been entirely wrong. Think fromlevels, i a covid and macro front, the markets now look a little bit complacent. Rupert, we spoke with the former governor of the bank of england yesterday who suggested the politics of hong kong is not his province. But he did comment on the distance that the west is from hong kong. Is distant would you gauge hong kong for President Trump . I think it is pretty front and center of u. S. Politics now. Along with covid is one of the defining issues of the Election Campaign this year. And crucially, this is a cross party issue in the u. S. All sides in congress are pushing aggressively for a much tougher start against china. I think trump feels this is a personal priority. There will be a very proactive congress on this hong kong issue. Has pretty farreaching implications. Geonationalt politics, it is a fullspectrum u. S. China competition. Tom can you envision western sanctions within equivalency to what we saw against mr. Putin . Me with the efficacy of some form of economic and political sanctions against beijing if they take over hong kong. Efficacy is a very interesting question. I do not know if this will be particularly effective because both sides will be strategic. The chinese clearly is imposing their will. Sanctions will be a likely development hit. I think that we should expect to see the full range of the u. S. s extraterritorial impact brought to bear against the u. S. China relationship. How do youupert, look at the recession and the trade tensions . Do you look at it in the alphabet numbers on when we see a recovery or when we get back to normal . There are so many metrics about how you assess the current economy. Rupert it is pretty hard. Take a look at the data, the current conventional data that we look at. I think that we shouldnt be blinded by the fact that these are terrible numbers. We are in deep contractionary territory. We will be looking at some of the more realtime data. But it is very gradual. Even in the countries where they are the most advanced and they are opening up, the scale of activity coming back is very slow. Beginning of a very deep political slowdown. Companies like china are further advanced. Very exposed to Global Manufacturing and trade. And ultimately, all of this depends on the developments of the vaccine and treatment. In the short term, how much opening up can we get . So far, it has been very tentative. We can open up without getting into problematic territory with virus infections. Tom good news, Rupert Harrison will stay with us. We are thrilled he can do that on friday before memorial day weekend in the United States. Coming up on the open, Mohamed Elerian and radical uncertainty in china. This is uber. This is bloomberg. Tom good morning, everyone. Stories,tching two particularly from america, very carefully. One of them is in hong kong. At the National Peoples conference in beijing. An extraordinary moment for china. We have seen a response from the state department. President trump making brief comments. We will get to that in a bit. And in america, we get ready for memorial day weekend with an understanding of where this pandemic is heading. Rupert harrison is with blackrock and he has a passing negative interest rate. Rupert, let me start with your Public Service the united kingdom. Did you ever think you would see negative Interest Rates in the u. K. . I go back to 2010 and i never thought we would see negative Interest Rates anywhere in the world. And i still am not sure we will see them in the u. K. I understand it is a Technical Glitch and governor bailey is driving that forward. You are good at the Financial System in america. It is perceived as a radically different structure than europe. Wouldve Interest Rates not have efficacy. Is that true . That you buy the idea that you put yourself in a negative rates and it will be different . In europe, the efficacy is questionable. We have a pretty significant negative impact. I think there are specifics in the u. K. In terms of Building Society and part of the Financial System. Those have been eased up somewhat. I still think the banks have been very reluctant. I think that we see the full spectrum of policy leaders available to them, particularly through coordination means that they dont need to go down the route. It is more a combination of yield curve control and fiscal policy . That is probably the right way to go. I expect that will remain the case in the u. S. As well. Francine we understand that negotiations are probably not going as well as they could be and there is no will to extend the transition period. What will we be left with at the end of this . The tone of the discussions are pretty negative at the moment. I think they will get worse over the next few months before it gets better. Remains very. K. Politically committed to some of the redlines. I think there is an argument in some parts of the u. K. Government that when the economy is so disrupted anyway by covid and the economic crisis, that exitmask and disrupt the from a lack of a trade deal. In some ways, it is even easier to take the short term pain in order to achieve longerterm fiscal goals. Fluctuationw much will we see on the pound . Rupert the sterling has been pretty weak already, particularly the euro. A biased lead to the weaker side. We are approaching a deadline around the end of june and about the formal extension period deadlikne. Deadline. Both sides will probably deescalate that a little bit. I think that it will feed into moments that are negative. Even the implementation of the protocol, it is something where both sides are weakening that protocol. Around the level Playing Field provisions. It will be negative for sterling for the three month horizon. Yesterdayeremy modeling down and getting some challenges that dr. Harrison sees. We will continue with Rupert Harrison of blackrock. Toant to draw your attention someone that has the sole and fabric of hong kong in him. That would be the great mark mobius. 9 00r. L area and in the hour. This is bloomberg dr. El erian in the 9 00 hour. This is bloomberg. Francine this is bloomberg surveillance. We are back with Rupert Harrison. We talked about the u. K. , china, hong kong. What is your take on europe . By Angela Merkel and emmanuel macron, but will other countries need a bailout . Rupert i dont think so in the short term. The Franco German agreement around the fund is a significant milestone that has been crossed, particularly in terms of Angela Merkel agreeing to go with commonly issued debt spent through fence france and across the european union. A river has been crossed in a small way. The constraint is the fact that it is being done through the msf regular budget framework, it delays spending. This is a seven year budget. Spending will be front loaded which is something we will not see in 2020. It will be spread across 2021 and 2022, and while it is a outcome, in terms of the scale of stimulus being applied, the overall response of europe is a lot smaller. Francine does that mean we will see more populism at the end of the crisis . Rupert that is a big question. We have to assume yes. One concern we have had over the last few years, we have been talking about populism in europe since 2016, was that this was all happening during the good times. Cycle,s the peak of the low unemployment, falling unemployment across the european union, and yet markets were concerned. We can only expect that in a very difficult Economic Situation that can get worse. It does not mean it will get worse in every country. You still have Angela Merkel in germany with high popularity, but we should be concerned about longerterm, high unemployment, concerns over immigration and china, these can drive populist politics. Tom we are enjoying a debate over 20 unemployment, modeled as high as 27 Unemployment Rate within the unique american political system. I will leave it up to you, dr. Harrison, how does the Parliament Kerry system of majority government deal with a 20 Unemployment Rate . Rupert that is an interesting question. The history of the u. K. Shows a Majority Parliament can swallow very high unemployment. If you go back to the thatcher government, you had very high unemployment as a result of the industrialization of the u. K. , and yet Margaret Hatcher became Margaret Thatcher remained politically dominant. Her votes were 40 or 45 of the population and she seemed to be tackling the major problem, inflation initially and then Union Control and the ability to govern the economy. Environment,t there is a difference between the u. K. And a lot of the u. S. It is hard to overstate this furlough scheme, almost 10 million. That is one quarter to one third of the labor force supported by this furlough scheme, keeping them connected with their employer, preventing the sky high unemployment we have seen in the u. S. , for now. Employerss on the being able to survive long enough. Tom as i look as an outsider at the labour party, i detect a visible change in the leadership. It is stunning, the body language and imaging we have seen from Jeremy Corbyn to the new guy. Have the winds shifted to the Center Ground for a more conservative labor labour . Rupert i think so. Era hasof the corbyn brought the labour party into the mainstream. At the same time, this is still not tony blairs labour party. It is a left Wing Labour Party economically, in tune with the times. The Consensus Party is moving to the left on economics, but now it is much more in contention. Politics in the u. K. Feel more normal. You have effective opposition and an effective Opposition Leader and the government failings are being exposed more. Francine what will Boris Johnson be judged on . Is it trying to safeguard the economy . He has been getting a tough time as of late. If there were a vote in six or seven months, what would people want . Rupert we dont know because we are in this phase where Public Opinion seems to be overwhelmingly focused on how governments are dealing with the Health Crisis. In the u. K. , the economic crisis has not hit home. You were talking about the furlough scheme. For a lot of people, the economy is stuck in suspended animation. They have not seen the full impact of the economic crisis. In the u. K. , the governments rating overall has held up. There has been a rush of patriotic support the government during a crisis but that is starting to fail. It will be interesting to see whether we move on to focus on the economic side, which they seem to have done pretty well, or whether dealing with the Health Crisis dominates, whether the government is perceived to have got it wrong. It is still too early to say. Francine Rupert Harrison, thank you so much. Up next week talk china and honk up next, we talk china and hong kong with Jonathan Fenby. This is bloomberg. Terrorism, there is no such thing as terrorism here. It is so obviously targeted at all the empty government protests. Kong, there isg no way for beijing to manage the special circumstances. It is deeply concerning to the United States. Hong kong is a great friend to us and we are monitoring t