Features in the europe in europe and the u. S. Keep rising as the European Commission presents its Recovery Plan today. Jamie dimon places himself among the optimists who see a quick economic bounceback. Plus, stock deluge. More than 4 billion worth of equity offerings were announced just here in europe yesterday within 30 minutes of the closing bell. 2. 8llion dollars billion offering and is eager is the largest sofar this year. We are just under an hour away from the start of cash equity trading in europe and in the u. K. Lets take a look now at futures. We are seeing once again green arrows after the big rallies that we saw the last couple of days. It looks like the risk on mood is set to continue. Dax futures up 0. 4 . The dax index here in frankfurt closed up yesterday more than 100 points. It closed up on monday more than 300 points, bringing it to over 11,500. Take a look at u. S. Futures as well. We are also looking at gains in u. S. Futures right now after the u. S. Equity indexes had a pretty great day yesterday. The Dow Jones Industrial average was up about 500 points yesterday. Playing a bit of catchup after the memorial day holiday. Lets take a look at the bloomberg first word news. They u. S. Is considering a range of sanctions to punish chinas crackdown on hong kong. Sources tell us options on the table include asset freezes or visa restrictions on chinese officials. [audio drop] voting has fact check label added to them. That takes readers to a page of reports about the claims, including one by twitter staff. The president says the social network is stifling free speech and interfering in the 2020 election. President Emmanuel Macron has unveiled a raft of measures aimed at reviving the car industry. The plan includes incentives to buy electric cars and cash for clunkers to encourage consumers to trade in older models. The total of roughly 8 billion euros also includes state backed loans, 5 billion of which are slated for renault. Global news 24 hours a day, onair and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. Lets get to the mliv blog. Has slipped to the lowest in about eight months in the wake of the latest flareup. Lets get live to mark cudmore. Is the market finally starting to price in these tensions . Isk i think that there clearly worries about what is happening in hong kong. The hang seng index is a notable underperformance today. Obviously, there is under performer today. The pboc gave a stronger yuan fix today, which may have been a positive sign that we are not trying to depreciate the yuan. In fact, we are fighting back against market pressure. Yet, the market completely ignored that and pushed yuan lower again. They are in a very risk positive mode at the moment. Equities want to go higher across the board. The concerns are the yuan and the situation around hong kong. The situation in hong kong is going to stay heightened until at least tomorrow, when the security bill is expected to be passed. Matt i saw that you were also talking about the european fact thatlan, and the it really could be a game changer. Tell us your views. Rk any kind of debt bearing debt sharing burden in the eu, if that is agreed, it is the biggest thing that has happened in 30 years in europe. The hope of the 2000s was that , the euro zone eventually be forced to do a fiscal union. But we, it survived, never solved that problem. Heightened in be the recent years with the debt crisis and the german legal verdict. Suddenly, we have a proposal for debt sharing. I know there are many hurdles, the money will not come through until next year. I think that is all irrelevant. One of the most stereotypically and traditionally fiscally conservative nations is finally acknowledging that we need some debt sharing debt burden sharing. It might be a watered down deal. As long as a bill passes that doesnt share the debt burden, that is just a massive game changer for europe. Suddenly, it will be reconsidered in an optimistic way as a real challenger to the dollar. I think in the next few years, we will see eurodollar back above 1. 30. Matt a longerterm call from you. Let me finally asked what you are hearing about the question of the day. Today, youre asking on the mliv blog, why are real and financial world the virgin worlds diverging . Yesterday, bob schuler says it takes back him to the takes him back to the great depression. What are you hearing from clients . The real and financial worlds are diverging because that has been the plan of policymakers. They could not solve the Health Crisis. It is still to be decided how that will pan out. Certainly, they were like him a lets not make the Health Crisis like, lets not make the Health Crisis turn into a financial crisis. They have successfully disconnected markets from the real economy. Therefore, markets are trading on a story of stimulus. They no longer trade on the economy. It is just about whether how much more stimulus we are going to get. That will not be permanent but that is the Current Situation at the moment. Thats when markets are trading very positively. At some point in the future, it will reconnect. It makes sense to me that markets are going, you know what . We dont care about the real economy. If there is a bigger problem there, we will just get more and more stimulus. This is not sustainable but it is certainly sustainable for a long time. Markets and investors know that the breakdown point is not that close. Matt thanks very much. Mark cudmore there, bloomberg mliv managing editor coming to us out of singapore. You can join the debate on todays question of the day. If you want to take part in that conversation, reach out to us in the and the mliv team. Up next, European CentralBank Vice President says policymakers are committed to addressing fragmentation in sovereign bond markets. We will hear from her interview next. This is bloomberg. The pandemicct to Emergency Program, what they have to say is that it is going to be an Emergency Program and it is going to be temporary. We are going to use all the flexibility. So far, you have seen the evolution of markets has been positive. So far, so far. Are you open to abolishing capsule king test capsule keep . Key . Simultaneously, we have flexibility. And we have flexibility in the shortterm, not only in terms of the assets we purchase, but as low in terms of the timing of the purchases as well in terms of the timing of the purchases. Markets much more quiet and calm. There is always the chance of a surprise, a shock. One thing you have not yet announced to the public is reinvestments. This is something i think a lot of people in the market expected. Does it have to happen . Theoretically, the program lasts until year end. Afterwards, we will see. We have not decided anything on that yet. I suppose that [indiscernible] it cant possibly end december 31, can it . We dont know if there will be a second wave in the winter. There is a variable, the evolution of the pandemic. If you look at the evolution of markets, the sentiment of the market is much better than it was only one month ago. I think that has to do with the evolution of the pandemic, you know, that the flattening of the infection curve. I dont know whats going to happen with the potential second wave. My view is that markets are and theire recovery of the economy once the worst of the pandemic is over. I think this will be extremely important for everything. You note in the Financial Stability review that low Interest Rates are a burden on banks and insurers. You said this in the previous Financial Stability review as well. Now, we will probably have low rates for longer. It threatens the solvency of some insurers, as you said. Does that suggest in terms of Monetary Policy, you want to stay away from any more interestrate cuts, focus everything on bond purchases instead . Our approach with respect to the impact of low for longer in terms of Interest Rates is that the real cost and the real drivers of the low profitability of the banks is not our Monetary Policy. It is more structural reasons ratio, cost to income even when you look at the pros and cons of our Monetary Policy, our Monetary Policy was positive in terms of using prohibition for the banks. Provision for the banks. When you put that together in a balanced weight, the pros and cons of our Monetary Policy, but you can see and you can regard ay, thethe end of the d Monetary Policy is not the real cost. It is acknowledged that the longer those low rates last, the bigger problems the bigger the problems become. Ight now, there is no alternative to this Monetary Policy we are delivering in terms of our programs qamar purchase programs, in terms of programs,ity purchase programs. Thats not the approach that we are that we have now. You know, we are focused on deliver delivery of liquidity to the banks. Impact on market conditions. Matt that was they european president nk vice speaking with paul gordon at the ecb headquarters in frankfurt. We are joined now by john wraith, head of u. K. And european rates strategy at ubs. He adds to a number of ecb voices over the last 24 hours that are reassuring markets they will be ready with the tools necessary in order to keep spreads and check, in order to support in check, in order to support the economy. What do you read from their messaging . John reassurance, i think, in a word. As biagi knowledge, there is so much as we all acknowledge, there is so much uncertainty coming from a range of issues, primarily how the trajectory of the coronavirus outbreak is going to evolve from here. , all of Central Banks, the best they can do is continue to reassure markets that they would do anything and everything they can to try and ensure that the structural support underpinning economies and markets remains robust, remains healthy, and that any potential weaknesses are immediately addressed. Clearly, that is very difficult for them but they are doing their best, certainly through communication and action where needed to provide that reassurance. Matt they do seemingly have more ammunition then they have used more ammunition maybe than we would have previously expected. How much do you think they have got left . John this runs into the issues we have seen around the german court. They are clearly venturing into territory, as you say, that was not anticipated or forcing fore because four foreseen before. I dont think we have any real clarity around what the limits might be. We are expecting to expand the not next week but in the middle of july. Clearly if there is a second wave, if the infection rate spikes up again, they may just have to do more and hope that the both of the markets from the point of view of their response to the actions, and also courts around europe and other governments and fiscal policy makers enable them to do that. So far, there is some relief that we have not seen those limits reached. Any time we think we are getting close to them, they have managed to find another way. Clearly, the worse things get, the bigger the risk they start to run into more problems. Matt you know, Angela Merkel reacted to the german court what some people are seeing as a monument tos decision monumental decision. It is a bit of a creeper. This could be the Alexander Hamilton moment or the biggest political shift in 30 years for europe. What do you think about the acron decision on a european Recovery Plan proposal . John it certainly takes them further in that sort of direction than we have seen before. You could point that out as a direct response to what the german court was essentially saying about Monetary Policy overspending is limits. Therefore, governments and fiscal policy needed to step into the breach. Ultimately, it suggests that governments, even in germany, are prepared to do whatever is needed to try and protect their underlying economies and protect the fabric of the euro and eurozone. We have been a bit more cautious about suggesting that this is a green light towards something that will end up with a full fiscal union. I think it was done because of the situation we are in and because of the german court ruling. Clearly, it was needed at the time and provided a great deal of relief from the markets, as you can see from things like peripheral spreads. I watch this space as to whether it leads to a development of further measures in that direction or proves a bit of a oneoff because of how extreme the circumstances are. Matt john, we are going to keep you with us. John wraith there from ubs. We have a lot more to talk about in his wheelhouse. Coming up, we will discuss bank of england chief economist saying that rates will not go negative soon. Are their merit to joining the subzero club . That is a debate we will have next with john wraith. This is bloomberg. Matt welcome back to Bloomberg Markets european open. Right now, we are 37 minutes away from the start of cash Equities Trading and we could see a third day in a row for this rally, at least for the dax and cac. The ftse was closed on monday for a bank holiday. It played some serious catchup yesterday and we are seeing positive futures today. Speaking of england, the central tok in the u. K. Is not close implementing negative rates, at least not according to the Central Banks chief economist. Clarifying an earlier remark that the policy is being assessed, he said officials are simply not ruling out any options as a matter of principle. John wraith from ubs is still with us. Would makeesting, it sense that you would not want to rule out a major option. Where do you fall in the debate on whether or not negative rates have been helpful for those regions that have used them or harmful . Agree, iflutely we you are asked the question when you have rates at almost zero as to whether there is any possibility they may go negative, as a central banker, especially given how uncertain the outlook is, i think you are bound to say it is under consideration. Why would you rule it out . Rates come with a lot of pros and cons and there are a lot of cons. It is not as simple as lowering rates from 1 to. 5 or below zero. Once you go below zero, you bring in all sorts of consequences for banks. It can have counterproductive implications which tightened monetary conditions. Clearly, there are circumstances as other central bank have determined where the pros effectively outweigh the cons. , think especially in the u. K. Given that the nature of lending focusedch of the banks on shortterm rates, that forcing them to lower their lending rates when they cant lower deposit rates anymore is a bigger problem than it might be in other economies. We think the bank of england is right to be ultracautious about this. We dont think they will take rates negative. We think there are other policies that would be more effective in easing monetary conditions and come with less damaging side effects. We think they will continue to be open to the possibility. Matt i have only got 30 seconds, john. What would your prescription be for ubs . John more qe from ubs . Possiblye qe and lowering the margins on the funding schemes so banks can lend more competitively at lower rates without being squeezed on their margins in a way that cutting two negative territory would do. The frontend looks after itself. Pathim more at the longer yield curve and we think that is what they would do. Matt thanks so much for spending some time with us this morning. Great to get your insight. John wraith is the head of u. K. And european rate strategy at ubs. Drilling keeps its 2020 forecast after lowering it twice in two months. We will hear more from the ceo. Dont miss that interview next. This is bloomberg. W . W . Uhiono welcome back to Bloomberg Markets. This is the european open, from the away start of cash trading in europe and the uk. Futures right to 1 3 to. 5 . Lets take a look at stories for ight want to watch today at 8 30 a. M. London time. Have an online q a event hosted by European Youth. Later in the morning the European Commission unveiled its proposal for a jointly response to the recession caused by the pandemic. Day oil t the majors including bp, exxon host evron with all their annual general meetings and investors will be looking for answers after the unprecedented market slump in the price and emand for oil and now in production as well. Finally at 9 30 p. M. , uk is scheduled to first flight with two nasa astronauts onboard. Fascinating to watch. Keeping the 2020 forecast after lowering twice in two months, Company ReportedFirst Quarter revenue below estimates, but maybe the getting a is little bit better. The joined now by c. E. O. Thanks so much for coming on first. Rg let me ask how the outlook is right now because it if youre getting a handle on things in terms least you at havent cut your forecast again. Is o, the First Quarter more or less in line with the expectations that we laid out in the beginning of and now we have a forecast for the rest of the ear that builds on that well not have any more new ontracts with Financial Impact in 2020. So the forecast that we put in our Trading Statement this morning, is based on that. Visibility for 2020 for me is quite clear. When we come to still await more news from what the outcolumn be from the oil companies. Do you feel like the worst is behind you, though . I mean, we were in free fall there for a while and now it looks like a recovery, a put in. S been do you see it that way . Could be what were seeing. However, i think its very say. Y to i twar still in the midst of the pandemic. See a secondto wave in the second half of the yea