Seem first, welcome to the program, thank you for joining us. It does seem to be a bit of a monday. What does that 02 . Why does the investor looking to buy risk assets question mark james assets . James the fall to 2 is encouraging people to take extra risks, on the basis that they cannot find adequate return and fixed increase interest. So they are having return free risk rather than risk free return. Matt why does it make sense to buy u. S. Assets right now . If i look at the wei on my bloomberg to see the moves in equities, the big drops that we have seen in europe to date are astounding. 25 is the year to date drop. 8. 5 . P 500 is down it looks like investors will continue to bid up u. S. Assets, why . James if we look at prior periods where we have low real yield, we see higher valuations of good quality companies. In previous growth bubbles we have seen priceearnings move between 45 and 65 and adjusted 31 times. People would say isnt that really very low . Rates,s very low cash and those marks are reasonable. Were also thinking about the fundamental background, with much higher bond yield and cash rates. The Federal Reserve has been adding more to the economy than has been possible in era. Matt we have not had the same kind of stimulus injections that we dontmarkets have the same kind of federal structure that the u. S. Has, but it seems that the European Union is moving closer towards that. James if we look at the fact the matchup between fundamentals and pricing, i might observe that this is a Good Opportunity to consider the value of gross and europe. Am convinced that growth remains in the united states. In europe i could see the excellent opportunity in the mining sector, where companies are able to have yield in excess of 7 . Im thinking of Companies Like anglo and php. Im looking at non quantitative easing and monetary theory is likely to lead to a significant uptick in activities. U. K. , it lookshe better positioned than normal, the market looks relatively we have ac and. Tructural imbalance in demand finally, i would say if investors are going to look at the values and europe, capital discipline is now much more there, and so has a asset exposure. A company with good capital discipline, but also with and if it is people move from packaging with plastic sandpaper. Of impact do you have do expect the massive to have . Unemployment james in global terms we will see a material markdown when the measures are over. I worry about Consumer Spending trends. In economy such as germany, negative Interest Rates are encouraging people to save and not spend. And i suspect that from a policy perspective we will see Central Banks recognizing the negative , i think great fiscal policy will support the jobs markets. James, thank you. Its great to get some time with you. Us andevan, talking to naming names, which is fantastic to get, about what he likes right now in terms of risk assets and companies in which to invest. Lets check in on the bloomberg first word news. To that we go to leighann gerrans. President trump is threatening true move the Republican Convention from north carolina. They are expected to nominate the president for a second term. Wantsesident says that he the governor to guarantee that attendance will be allowed despite the coronavirus. In hong kong, protesters have demonstrated in a largest demonstration in months. Cannons and tear gas were fired at protesters. 180 people were arrested. In the u. K. , oxford has run into a hurdle while running into a coronavirus vaccine. According to the telegram, a decline in the infection rate may make it difficult to prove whether the vaccine is successful. The head of oxfords institute said theres a 50 chance of coming up with an effective vaccine. Mandatory quarantine ends on the the first for tourists, tourist industry represents 12 of gdp and the government is looking to establish some core doors between parts of spain that have the coronavirus outbreak and similar areas in the rest of europe. Global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. Im leighann gerrans, this is bloomberg. Matt thank you very much. We have a number of important speakers today, for example, a german finance minister is out commenting on the bailout of. Ittle anza of lufthansa and the German Government investing 10 billion into the flag carrier is temporary. We also have a German Economy minister coming up later. Speakers,f dramatic more on the drama side of things, the political drama, we get a statement we expect from toinic coming, a top adviser u. K. Prime minister Boris Johnson who was seen driving, Walking Around and having a chat 250 miles away from his home when he was supposed to be selfisolating because of coronavirus concerns. We will see the excuses he has to make when he talks. This is bloomberg. Markets,s is bloomberg special edition, usn u. K. Markets are closed today. Lets get a check on whats going on with emery. In germany,ction is where you are sitting, but the european markets this morning are risk on. They are shrugging off the geopolitical tensions that we have been seeing and ramping up the rhetoric between washington and beijing. Is outperforming, up and the british pound this morning, trading below 122. This is one to watch, given that we will have Dominic Cummings giving this speech with a lot of pressure on the Prime Minister. And oil this morning is up more than 1 . They say demand will be back in the market has been discussing whether we have reached Peak Oil Demand as the pandemic fast forwards the outlook. Something going on with corporate space, lufthansa is a huge story, the stock is up more than 6 and we had that final , and we reach with as much as 9 billion euros, and schultz was covering this story closely, as well as buyer they are bayer, reaching an settle on number of cancer lawsuits. This has been a dark clouds since they have been in the monsanto deal. Nowvw was negative, but eking out a positive territory. A ruling that owners of any manipulated vw cars are entitled to damages. More on dieselgate come im sure you have a lot of thoughts on vw, you have the car space. The ruling allows owners of these cars to bring them back and tell volkswagen they want their Purchase Price back. They have to deduct the miles driven. Volkswagen, one for and now rising. Get to the other stories that we are following, everyone in the u. K. Or related to the uks following this saga, this body, Boris Johnson this saga, this drama, boris is facing a political crisis as he defends his top aide, Dominic Cummings over claims that he breached lockdown rules. I think he followed the instinct of every father. I do not mark them down for that. In every, that respect, he has acted responsibly, legally, and with integrity. He is now set to give his own Public Statement and answer questions. Sebastian. Is why is hisestion is biggest political problem to deal with since his election, this. Why is Dominic Cummings so important. This is the guy who masterminded the vote leave can plane campaign. Hes very much the ideologue who stands behind johnson. We have seen the Prime Minister waiver from his time as mayor of london to now in terms of what he stands for. This guy is the guy who has the views. But Boris Johnson would be a different man, he throws the whole weight of number 10 behind defending him. There is this statement in downing street, but what is so extreme and unique is that this is an unelected official. Clear if hete speaking on behalf of the government or his own behalf, but hes giving us treatment a statement in downing street, showing the extent the government has gone to to hush this up. That we are talking about this three days later shows what a big story it is. Matt if hes truly that it such anif important moment to Boris Johnsons government, you hear what he has to say. , as i havehas been read in bloomberg stories, that he had to deliver his child to sister, so, or his they could take care of the kid while he self isolated. But i dont imagine he is so underprivileged that he cannot find someone else to take the kid. Why dont his parents or sisters come pick the kid up . If he is such a important person in government, probably the Prime Minister could even arrange a limousine. Why does he have to drive to under 50 miles away when he was supposed to be selfisolating to fight the coronavirus . Thats a response, why didnt he get some care in london . Parents did not even come into contact with the child, they were leaving food outside. I think hes doing this because he can and he did not expect this to be a huge event. He believed it was a westminster bubble story and it would blow up within a Certain Group of people. And i arect that you talking about this on Bloomberg Television shows that its gone much further. Its very hard to predict what the British Public are going to latch onto and care about. If you factor in the election in december, Boris Johnson was in the fridge and that never really damaged him on election day. Is one of those moments that has cut through. People are really agreeing that they had made sacrifices and stayed at home and many are saying i have not seen my relatives who are unwell, when a Government Official does that. I think the feeling for many people is that its unfair. Thats why this has cut through rather than other stories. As a lesson to Boris Johnson, if losing his advisor is the most serious thing to happen to you since the election , definitely send him an uber. Sebastian, thank you for joining us. Advisorhear from the any moment now, we will bring you headlines from that event. If you have a bloomberg terminal you can catch all of the. Iews using tv you can stream everything live and can check out our graphic, click on our charts, just type tv on your terminal. This is bloomberg. Ist live, from berlin, this the european close. We have seen gains on those indexes that were opened. At the dax and the cac. The u. K. Is closed for a public holiday, as is the u. S. Will discuss the companys development of Contact Tracing in the u. K. , and possibly in the u. S. They spoke with guy johnson in an interview. We have been working closely with nhf, the national nhs, thees National Healthcare system of the u. K. We need four constituents at the table, the medical experts to help save lives. There will be political bodies, it is safe and proper to get the economy started in the balance of personal and human interest. We have privacy experts with the right balance of near and longterm and the protection of personal privacy. And number four is the technologist. We believe that working with , wenhf and the trial believe we have a good compromise of those and at the top of that heap is does it help save lives . And having medical experts at the table. We feel good about that, and the government has said they are expecting this to come forward to the people the u. K. Very soon. Vonnie what your biggest risk . Lily companies would like to get in because theres only growth. We are developing on behalf of the nhs. Broadlyut to make this available. We are far more interested in saving lives and restarting the economy, have also open source to the technology. Willhas two benefits, it allow people to mitigate the concerns of privacy and how the data is handled. They look at the code and make sure it is implemented well. But we hope to raise all boats. That many capabilities emerge worldwide and other countries may implemented in their own way. But we see, maybe the third point, would be that over time we believe there needs to be international collaboration. There are no boundaries to covid. It has obeyed no national limitations, it must be something that has international and statewide collaboration. So information can be shared and people can be identified and the effects of the pandemic can be minimized. Guy the debate is simple, why is the u. K. Government going down a road that is different than google and apple . They have decided that they are going to produce more automated morects, why is the centralized product the way to go . Two things. They are working on this, and they just started to put forward some of their ideas. We have a shipping app that we are doing with the nhs. We are ahead. We are quick with the momentum and the nhs head said we will move quickly and get this developed rapidly. Nnie a bit of there. Sorry about that. We are looking forward that there may be an opportunity to build up some of the work that has been done complement the work that has an accomplished very effectively. About of the key things track and trace is that you need fast results. At the moment that has not been delivered upon by the nhs. If wehe product work dont have the test results back within 24 hours . Likeis the product looking . What results are you getting if its going back into the system if its even 10 days old . With incubation periods that can be 14 days long, anything less than 14 days should be beneficial. But the smaller that window becomes, the greater the efficacy could be. And the four constituents at the table, the medical public that can help professionals, this is why they need to be sitting at whether theres notification around explicit testing versus symptoms and working through the different tradeoffs. Our job at the table is to make sure its done well. Welcome back to bloomberg markets. U. S. And u. K. Markets are not trading, but we are watching european markets close up or than 2 , a bigger than 2. 5 gain on the dax in germany, now up almost 300 points to 11,370 on optimism that the lockdowns are safeell in terms of havens are not bidding up s p futures, although the s p cash trade will not happen today, s p futures are rising as our dow jones and nasdaq futures. Lets check in on bloomberg first word News Headlines with leighann gerrans in london. Ann protesters are bowing to stage more demonstrations this week in hong kong after hong kong announced plans to crackdown on dissent. Police used tear gas and water cannon against demonstrators. At least 180 people were arrested. Now japan as and its nationwide state of emergency. Coronavirus cases have tail off and Prime Minister shinzo abe told a News Conference that reviving the economy is now the top priority. Government will decide in a second budget to help businesses and individuals. The u. S. Will prohibit the entry of most noncitizens arriving from brazil. The country now has the secondhighest number of coronavirus cases in the world. Restrictions do not apply to the flow of commerce between brazil and the u. S. Boston fed president Eric Rosengren expects companies to start receiving money through a centralbank bank program in two weeks. The main Street Lending program as part of the emergency effort aimed at keeping credit flowing. Tois designed to provide up 600 billion dollars in credit to small and mediumsized companies. Global news 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. I am leighann gerrans. This is bloomberg. Matt thanks very much for that. Stories. Of our top germany has reached an agreement to offer lufthansa a 9 billion euro bailout, almost 10 billion. According to a statement, the investment invokes an initial 20 stake that could rise to 25 , plus one share, which all optional describes as a temporary investment. We are joined by mark man duca mark manduca. What do you think about this bailout. Is this enough . Has been concerned about the state it is in financially, as evidenced by a letter to employees a couple of days ago. Does this solve the problem . Finally have a package, and weve been writing extensively about this. The package provides around 9 billion euros, and there are four parts to this deal. Credit ratinghich agencies will largely treat as equity of 5. 7 billion euros. Third, the German Government is taking 20 private equity as you referred to, and they have to fight for some convertible lurking in the background. As ive said before, it is the second part of this loan that bothers me, the 5. 7 billion euros. It starts with a 4 Interest Rate but ratchets over time and this is not good for the company. That will cause a struggle for a company that lacks free cash flow. This is telling us there is a far greater rights issue or Capital Raise coming down the pipe in the years to,. In the years to come. Matt what do you think about the competition question . Does this unfairly help in terms of competition . In germany it is not worth talking about. What about internationally . Mark it is difficult in terms of competition. This is still dependent on the eu. The company has 65 market share, or thereabouts. What the eu will be addressing is the amount of stock in the munich and frankfurt hubs. I will also note they had 85 and 90 of their german domestic market. We will have to look at this closely. I have always worried about the history of bailouts. One does not have to gaze profoundly into history to realize the government paid for these kind of industries and corporate. Doing is taking a seat on the board, offering restrictive governments, ratcheting high Interest Rates by the end of the term, and you cannot rule out legal challenges from better capitalized airlines this ase who do not see resulting in a windfall for equity investors. I want to stress the point, we continue to see risks to the downside to our . 50 target price. Hear that and good to get some time with you. Mark, citigr