Bigger. Astrazeneca approaches gilead for what would be the Largest Health care deal in history. A joint company would be worth almost . 25 trillion. Cheaters. Brents eightday streak is the longest since february as opecplus seals a deal to extend output cuts but worries persist that some nations may not to the line. Payrolls rebound. On employment in america declined. The surprise jobs bounceback does not apply to black americans. Colin powell turns against trumps threat to use troops against protesters. Lets take a look at what is going on in futures. European futures are not pointing higher right now. We get german industrial output following more than expected. 17. 9 month over month, extending a 16. 5 drop. But even before this news which is just breaking right now on the german economy, we have european futures down. Not seeing the same kind of gains that the u. S. Markets saw after those jobs numbers came out, so not catching up to the u. S. Market. That said, european stocks had a and twoc day on friday solid weeks. Anna European Equity markets did have that great day on friday. The spanish market, austrian market, both of those up by more than 4 . Looking for reaction to the german output number. We do not see a great deal of it right now. The euro fluctuating with that number. Lets have a look at the gm mnc what we can tell about the Asian Session we have been going through and asian equity markets have been pushing higher, up by. 7 . The hang seng, which wobbles into negative territory around half an hour ago, back into positive. Broadly, we have gains coming through in the smaller markets and also in the japanese market, up by more than 1 on the nikkei. 1. 4 to the upside. The story of equities has been a positive one. In terms of the fx markets, we have seen some dollar weakness last week. We continue to see that. The bloomberg dollar index down 1 8 of a percent. Prices inon ore singapore up by more than 5 . Oil prices rallying with brent at 42. 80. People talking about whether we will see brent at 50 per barrel. The commodity story continues apace. Lets get into the conversation now about what is going on in this Asian Session. Modest gains after fridays u. S. Jobs report smashed expectations and bolster and of a quick economic rebound. We are back to talking about that the. Governments are using the coronavirus lockdown to revive growth while controlling the spread of covid19. Both takingulge him measures to use the lockdown today. Lets turn to our mliv rates strategist, who joins us now. No doubt you thought a lot about how on earth the estimates of job losses were so off the mark because in the end, we saw job gains in the United States. How has that reshaped your thinking about u. S. Assets . Good morning, anna. As we said, there is some talk about possible missed of data in that report, and not one economist foresaw gains, which was a big surprise in itself but the big church take away cannot be mistaken, which is that the economy is holding up much better than everyone thought. What does that mean for the markets . A weaker dollar. Why would that be so . Currencyr was a haven through the coronavirus pandemic. Now that the economy is healing, if we get continuing signs that this was indeed the case as opposed to just that one off jobs report, then the dollar will continue to weaken and on the risk currencies will be bid even more. Wondering what you are thinking about oil and its affect on the currencies that you cover. Ven good day, matt. Commodity currencies will do very well in this environment because they have got a double boost to not only from the opecplus deal but also from the riskon Global Sentiment that is boo seeing all currencies in general. That said, the australian and new zealand dollars are already trading near fair value because they have them quite a lot in the past few weeks so i expect the european commodity currencies, the norwegian krone and swedish krona, to gain the most from this. I would not be surprised, matt, if the norwegian krone approaches the euro over the next few months. Matt. Anna. Anna where do you see the euro heading next . We have had this industrial output number look worse than expected. A slight wobble. Not falling by much at all. There does seem to be a theme building amongst the guests we talked to. We spoke to a couple who had positive views on the euro. What will limit the against the euro can make here . Upside thero is dollar and possibly towards dollar 15 in the coming weeks is the biggest story curve steepening we have seen globally and the riskon environment that is making the dollar weaker. We all know the euro area economy will not do as well as the u. S. Economy, but thats already baked in the price, so all said and done, i think the euro has buoyancy this time around. It is the most interesting the currency has been in a long, long time. Anna, matt. Matt thank you for joining us. Ven ram, our currency bloomberg mliv currency and rates strategist. Worth noting the euro ticked up 3. 84 on friday. It has been having a fantastic rally here and right now, we are trading at about one penny under that 112. 83. After americas blowout jobs report, investors will look for reassurance from Jerome Powell to discuss this weeks rate decision, next. This is bloomberg. Matt welcome back to Bloomberg Markets european open. We are 50 minutes away from the european open, looking at futures that are pointing lower. Lets get the bloomberg first word news here here are our top stories from the terminal. Opec and its allies have agreed to extend production curbs by one month but skepticism the cartel will be able to ensure compliance is tempering price gains despite agreeing to the move. There is doubt some in the group will stick to their pledge. The deal is a victory for saudi arabia and russia. Deadlocked in a price war just two months ago. New york city is lifting its curfew as protests remain mostly peaceful over the weekend. This as the city prepares for life after the coronavirus lockdown. In a radical move, Minneapolis City Council has pledged to begin the process of dismantling its police force. Members say they will consult the community on how to replace it. The u. K. Is pressing ahead with the two we could on International Arrivals despite airlines saying the move will devastate tourism and wreck any chance the travel industry can recover. They are threatening to sue over the policy which comes into effect today. Global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. Anna. Have beene discussing, the jobs numbers from the United States on friday really provided a boost for risk markets. Payrolls gained 2. 5 million in may, trouncing forecasts for another sharp decline. That but the s p close to erasing its losses for 2020 so nearly year today positive on the s p but the picture in the real economy is anything but rosy when you look at it more broadly. Lets get into conversation now. We are looking at the global head of strategy and solutions at Societe Generale. Great to speak to you on the program. Does it make sense to you that the s p and the dollar are very close to where they started the year . Does it make sense for us to be back at those levels . Becausein some ways, the s p is not the u. S. Economy and i think this is a very important element and the dollar has sort of been impacted by a record amount of stimulus and Government Support that is clearly helping become a former a series of defaults. I think the key element here is that, number one, the factors driving the s p have been the Health Care Stocks which will make a lot of earnings throughout this lockdown given the massive usage of social media cloud computing. Now, the second wave of the rebound is driven by the value stocks, the oil stocks, given the rebounding in the oil price. Last but not least, this is something to bear in mind that this is a self inflicted economic hibernation that was accompanied by a massive amount of support to prevent asset prices from collapsing. The economy ultimately going into a depression. Sense if the u. S. Put that economies themselves on hold and now, they are juicing it to get it back up to speed. I wonder what the negative effects are of those jews. Of theexpect any unintended consequences, the problems we had with quantitative easing in the past two, again . To come again . Theu the same ways government looks to flatten the curve of the pandemic, the contagion, Central Banks have looked to flatten the curve and they managed to do so very well because these problems will be extended into the next few years. One of the things that is quite striking is the amount of highyield debt issuance yeartodate which is over 1. 1 trillion dollars, double the amount of last years. So companies are going to be faced with weekend Balance Sheets and a lot more debt than what they had going to the crisis. In a recovery that will most likely be lower than what is expected, so today, i think the major concern will be a Balance Sheet repair that corporates will have to go through, and capex,uld lead to lower low investments, and that might force Government Support to be longer thanbe required. This will bring the question governments finance their deficits and corporate taxes can also be another consequence and may be tech stocks could be the victim of that, and last but not least, the elections the result of the u. S. Election will be a major determinant on fiscal policy going forward. You mentioned tech stocks. We see the nasdaq doing much better than some of the other u. S. Indexes right now, so either the s p is flirting with the flatline for yeartodate, the nasdaq has made it out there. There has been highyield issuance for debt markets. We also see lots of companies coming to market, asked for Equity Investors to put in more money. Talking about how theres going to be a limit to the that the Fund Management industry can step in and support these. Do you see that as an area of weakness . Will companies be asking for investors to step up and they will be faced with nos from the Equity Community . Kokou there is a price for anything and i think one of the is the dispersion between strong Balance Sheets and weak Balance Sheet companies. This is a team that we have been very sort of bullish about and it has paid off pretty well through this crisis. I think that, yes, strong Balance Sheet, and those who have that perspective, they have seen a pretty strong amount of inflows. They will be able to raise equity and repair the Balance Sheet. In the same way we had a releveraging phase before the month 2020 event of share buybacks. We are likely to see equity funded debt for companies that will have no choice but to reduce the amount of debt that is taken to survive this crisis, and i do think that they will be able to raise these equities at the right price. Matt i mean, we have already talked a little bit about bankruptcies and you point out the government and the fed have done what they can to try and stave off bankruptcies. We saw a massive blowout in spreads at the beginning of this crisis. Hillary put together a chart for me. Tightened bothe in terms of highyield and investmentgrade credit but they are still much higher than they were. Do you expect bankruptcies to continue . Could we get a second wave . Could we get cascading bankruptcies later on . Kokou this is the biggest risk, and i think the bankruptcy that we could have seen the fed has it is stepping in the highyield market and compressing spreads and the market is preventing liquidity in financing. I do think that the biggest risk is what i call the fear factor. Is1933, roosevelt said there nothing to fear but fear itself when he was talking about the great depression. Similarly today, if there is fear around social distancing, around the Risk Appetite of investors and households, the marginal propensity to spend could be lower than expected and this could drag and slow the recovery, so the amount of bankruptcy that we could see in the next few years on companies increasing leverage will be directly connected to the amount of confidence we are able to bring give to investors and consumers because otherwise, demands will be more subdued and therefore, cash flow for corporates will be more challenged. Ultimately, banks will not be able to prevent companies from defaulting. Matt thanks very much. Kokou agbobloua from Societe Generale stays with a spirit we have more to talk about with him. Coming up, europes show of unity wins over investors look at the euro powering up to 112, 113, 114 is next . They heaped praise on the cohesion in the region. We will talk about that next. This is bloomberg. Matt welcome back to Bloomberg Markets european open. A little under 40 minutes away from the start of cash equity trading and we are seeing of red arrows bit on futures. Maybe it will be some profit taking. We had gains of 2 , 3 and more across European Equity indexes on friday. The ecb president , Christine Lagarde, appears in front of european lawmakers days after the central bank boosted bond buying by more than the market had expected. Speaking to bloombergs governing council member, pablo hernandez, he said deflationary risks warranted the decision to ramp up stimulus. Kokou agbobloua from Societe Generale joins us. You concerned about deflationary impulses in the european economy . Kokou clearly, this is something you can clearly see when you look at the breakeven inflation. We had it in the euro area starting to recover, and on top, we have negative rates across multiple sovereign issuers. Oflation in an environment more leverage is sort of a pretty bad recipe for any economy. How difficult will it become for the ecb to manage it . We hear from policymakers about using all the tools available to them. They have tools to deal with this . Kokou yes, absolutely. Clearly, the Bond Buying Program , in terms of size, was a strong signaling mechanism. It is something that managed to do pretty well thus far. The worse it is for the banks Net Interest Margin and their ability to lend to the real economy but what has been pretty strong and effective in this crisis is the fact that Central Banks and government have joined forces in doing some things if it could by historical standards. This is why markets are responding in a positive light. That being said, i think one can clearly point to a court that says the biggest risks now is not to take any risk because if the recovery is not as strong or sustained, then we could get stuck in this liquidity trap and ofinto the japanification europe, the long period of low growth or even zero growth with sort of deflation, and this would put athis call on households and corporate Balance Sheets for deleveraging. The central bank has no choice but to act with a to sort of brain confidence back to markets. We know Central Banks will do whatever it takes right now, governments injecting a lot of stimulus. Those who have the ability at least right now. There are some unknowns. Is there going to be a second wave, how much does the economy recover . What do you see your clients doing, especially european clients, in terms of strategy . Planere an overriding game that they are executing right now . Kokou yes, i think a lot of clients have reduced their risk and moved into cash and defensive sectors given the unprecedented volatility in march, and i think london len in once said there are weeks where nothing happens and weeks were decades happen. As an interesting given the feart of inflation later down the road. Fixed income the space where you see the curve steepening trades. We are the idea is that in three years time, the massive amount of sovereign bond issuance, even the recovery fund, is acting with the issuance it has to do. It will lead to a steeper curve and higher yield. In the short term, it is under control. Longerterm, forward curve, bond yields should be it is clearly a strong theme. Anna interesting thing to talk about. Kokou agbobloua, thank you so much for joining us. We will see if we get comments. Global head from socgen. We will talk about oil. Crude climbs again. The Oil Rally Continues after opec makes another move at the weekend. This is bloomberg. Welcome back to the European Market open. In terms of the equity session, we are half an hour away from the start of the trading week. And from the equity market session, we do expect to see weakness at the start of trade, the asian section gained, but weekend of early from the jobs report. We see entrenchment expected. Talk about oil. Opecplus agreed to a one month extension to the groups Record Oil Production cuts. It also adopted a stricter approach to ensuring members dont pump more than they pledge. Its all about complaints. This is a victory for saudi arabia and russia, with a price were behind them, to control iraq, nigeria, and others to control prices. And saudi arabia raised the official price of oil the most in 20 years. Were joined by alex booth, head of market analysis. Good morning. What is the significance of what we heard . What is going to have the longest Lasting Impact . As a month of production cuts, or is it about complaints or what saudi is doing on price . Alex hi, good morning. Good points that you make. I think the enhancement over the weekend was certainly, i would say welcome by the markets. I think if we dont see these cuts extended, certainly the end of july, youll see the length start to build in the market again. We certainly needed this extension,