To gains ahead of todays fed decision. Investors consider the possibility of a return to 1930s era yield curve control. Kowtows. Teaus mike pompeo accuses a company of bowing to beijing. A top investor adds its voice in the rebuke of hsbcs decision. Time is running out. Cerberus is tired of waiting for a turnaround at commerzbank, calling the banks performance an abject failure, the activist investor seeking two seats on the Supervisory Board to turn things around. We are just an hour away from the cash in europe and the u. K. Let us take a look at futures first. We have turned from losses to gains, now looking at green arrows on european futures after dropne to two plus percent we saw in cash trade yesterday, we are also looking against in u. S. Futures, right now 0. 5 , no matter which contract you look at across the dow, the s p, and the nasdaq. Anna . Of breakingle bit news coming through on the spanish clothing retailer inditex. Delaying its dividend for 2021, but we are waiting for the full set of earnings information coming through. Will there be a loss reported . We are watching out for sales trends. Watching out for what they say about the way the business is structured. Looking for signs of resilience, any signs of resilience in that business. Detects,cused on and but lets jump to the desk into tech focused on inditex. We have had moves to the upside. Equities in asia around 4 0. 4 . We are waiting for the fed, what kind of guidance for the fed, even if there is not a great deal of move on policies. You mentioned yield curve control and whether that will be part of the conversation or not. The dollar does resume its downward trend. Something of a theme of late. We saw the s p down by 0. 8 . Perhaps that is no surprise given how we have gone back into positive territory for 2020. We see positive sentiment. Matt that was a fascinating read and it will be good to talk about with our guest today. Let us get the first word news. Todays top stories from the terminal, the World Health Organization is walking back its comment on the a symptom attic spread of the coronavirus. A day after saying people without symptoms passing on the illness was very rare, it now says it is still unclear. The head of the agencys emergency diseases units has previous suggestions were a misunderstanding of her comments. Hsbc and Standard Chartered are facing a backlash for their decision to back hong kongs controversial security law. Investors say it is uncomfortable with the decision and the Parent Company for its Parent Company is one of the biggest shareholders in the two lenders. Hsbc,ompeo has blasted describing the move as a corporate kowtow. A Corporate Finance minister will not seek another term as president of the euro group. The announcement triggers a race to replace him leading one of the blocs most powerful bodies. Top roles are often divided along geographical and political lines, that puts spain in position for the drop, making the finance minister a strong contender. Global news, 24 hours a day, on air and at quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. Anna just a quick update on inditex. When we were going to see the first ever loss on record, and we do. First quarter loss coming through at 409 Million Euros. The first loss on record we are informed. We also get the numbers on sales. Inditex delaying its dividend for 2021. Let us get back to the picture across these markets. Asian equities are mixed. Investors take stock of a rally that has seen the s p 500 wipeout losses for 2020. Hedgery had fun Fund Managers as it has confounded those who were doubtful. If there was a franchise for humble pie, there would be a milelong line. Anna big names perhaps eating humble pie. Let us get into the conversation. Worth remembering of course we have seen u. S. Stocks back in the black for 2020. Nasdaq in particular doing very well. Even the broad measures not looking too bad for 2020. Emerging markets lag behind. Is that something you see catching up or is underperformance justified . Underperformance is justified to some degree. If you take u. S. Stocks and use contract and you subtract those companies, u. S. Stocks have not done quite as fabulously either. It has been a rotation into technology and away from growth. Of course vm has a little bit of a discount because it is perceived as riskier. Subtract tech versus nontech is not as great. Now seeing this seeing this trade war between the u. S. And china reemerge. How is that affecting markets right now. I actually think people are more confident and they should deal, atthe trade least for the time being. We have had larry kudlow and Robert Lighthizer making it clear the trade deal between the u. S. And china is safe for the time being. Have hadink given we strong asset Market Performance in the u. S. , phenomenal payrolls tober, it allows politicians focus more on the positives. Donald trump can now spin a story about his success in domestic markets without having to point the finger so aggressively at china. For the time being, things are better between the u. S. And china, and that is one of the reasons the chinese yuan could do reasonably well for the next couple months. Things china exports a lot of things, but one of the things it does export is deflation. When we see chinese backed deflation, that has an impact on the rest of the world are we expecting that once again making life more difficult for those who would like to generate inflation in developed markets . Definitely. We saw today with the cpi and Producer Prices in china. These were significantly below expectation. It is clear china will continue to explore on the producer side deflation margin. The world is perilously close to deflation anyhow. Thats one of the reasons the Federal Reserve is unlikely to say anything positive at this meeting this evening. Matt just want to quickly ask you about this big new wager. What are the chances the hong kong dollar peg is broken . Close to zero. It is unlikely they would let the peg go under the mild pressure we see today. The hong kong dollar peg has survived worse than this. Heending on the way structures his trade, he can still make money if the market probability. Igher it is not necessarily a bad trade. It is unlikely the peg will break. Matt thanks for joining us. Bloombergs emerging market strategist. Coming up, we are going to get closer to home, focusing on german optimism despite the deep divisions within the eu. Olaf scholz believes the block can reach a recovery deal quickly. Quickly. Manus matt welcome back to Bloomberg Markets. This is the european open. Futures higher across the board on European Equity indexes. Coronavirus unions recovery packages facing stiff headwinds from the budget hardliners. Germany believes an agreement can be reached quickly. We are joined by a european economist at ubs. There is a lot of talk about the frugal and budget hardliners, but do you think we are going to see this package in the same size be passed in some form . The size of the package came as an upside surprise for the initial proposal. The size itself does not seem to be the biggest problem. Where we are seeing more grain 10n is regarding loans. This is the area where we think we might see watering down of the final agreement. Anna is that something other European Countries should think about . Obviously they are going to need some way to pay back debts at some point. Should be cutting taxes in the shortterm. How does the tradeoff look across europe . The key element of the fiscal stimulus package that was announced last week. When we think about the implications, clearly that its going to be something that should support consumption in the near term. The last changes in germany, essentially a mirror image of 2007. The biggest impact was on bigticket items. Consumption of that should be supported by this temporary tax cut. At the same time, the tradeoff thenen consumption now and having a drag on consumption in the First Quarter of 2021 once the tax cut gets reversed. Fiscal think about stimulus across the euro zone, this is something other countries could potentially consider. So far we have not seen any announcement. Measure, we will need to take into account near term longerterm impact. Matt what do you think about the nearterm impacts of the ecbs move . Talk about a bigger package than expected in terms of the eu or the ecb. Now we are seeing a bigger increase in the tech program that had been expected. We saw that last week. Is that going to move the needle on inflation . Of 600 billion and the extension until june 2021 came as an upside surprise. Given this upside surprise and an absence of escalation of the crisis, the ecb might not have big policy decisions before later in 2021. Ecb adding more to the system and what it means for inflation, it is not just about the level of liquidity. What could actually push inflation higher, if banks were to use their increasing reserves , created as a result of purchases, if they were to use them to create new loans. , an immediate pickup in demand for credit, liquidity needs, we expect credit to actually decline, which is what happened during the previous recession. From a sovereign debt perspective, we see the essential for a prominent comeback in inflation. That is interesting. Looking at a fiveyear expectation chart, those breakevens seem to drop in the month of march in the euro zone. Moving higher with some stalling in there. Generally they have been moving higher, almost to prepandemic levels in terms of Inflation Expectations. How high can inflation get . You dont think very high. Inflation toexpect come back significantly in the next few years. When we think about what has loyal flation lower, lower oil prices. Time, a temporary negative drag on inflation is also likely to come from this in germany. That is going to push inflation in germany lower in july. It is going to be of a temporary nature. That is going to be a significant drag on the euro zone inflation in the near term. What i would say has driven Inflation Expectations since march is the fact that mobility restrictions across the euro zone started to be lifted. Data, such asme electricity consumption, all of this these indicators are suggesting activity has started to pick up. How much isnt, going to translate into growth is still very hard to say. Matt thanks for joining us. Latest in through the the blocks efforts to reinvigorate the economy. Let us get the Bloomberg Business flash news stories. Todays top corporate stories from the terminal, time is running out for commerzbank. To fix itself. That is according to Cerberus Capital management in a confidential email seen by Bloomberg News. The letter says leadership is too focused on on profitable Revenue Growth and lacks the sh a bloated cost base. The fund is seeking two seats on the Supervisory Board. Crossfits ceo is stepping down after comments on the George Floyd Protests. In response to a tweet calling racism a health issue, he 19,ribed it as floyd mirroring covid19. The tweet cost the company a partnership with reebok. He says he is resigning for creating a rift in the crossfit community. A company has persuaded lenders to grant it more flexibility financially. It is a key step for keeping its sale to lvmh on track. Flexibility includes raising the limit on the companys debt to earnings ratio. Any breach could have given tiffany a loophole to alter the purchase or back away. That is your Bloomberg Business flash. Ing up, bond markets europes bond market slides through one trillion euros worth of sales. We will discuss the record debt issuance both here and in america next. Anna welcome back to the European Market open. Equity markets looked to be heading for a positive start to trade this morning. Up by half a percent on euro stoxx 50 futures right now. Lets get into a different conversation. Europes bond market has surpassed one trillion euros in sales. Takingandmark event place, hitting the milestone at the fastest pace ever. What has fueled this rush to the debt market . ,ho is it raising this money doing this borrowing . Same is almost part of the story we were talking about yesterday. Yesterday we discussed stock issuance. Bond issuance is another phase of the same coin. That surviveddity the pandemic, but this is not just companies, it is oftens as well sovereigns as well. Ireland had a record day. This is what Central Banks were hoping to accomplish when they started to go into the corporate debt market. When they cut Interest Rates as low as they are, hoping to spur this exact action. It is not only the supply, we have this big source of demand. It is happening on both sides of the atlantic. The u. S. Passed their 1 trillion mark a couple weeks ago. For europe, this happened three months quicker than it did the prior year, so this is a record pace getting to that one trillion euros mark. How much longer can the pace of this issuance continue as a function of supply and demand . At least the point we are at the moment, there does not seem to be any signs of corporates and countries leading up. The u. K. , there has been a huge source of demand for u. K. Bonds given that the boe looks like it is set to undergo quantitative easing. That continue to look strong. At the same time, the risk for these bonds is that a three month low. Basically levels before the crisis. That should tell you it is likely to get complicated from here. We have seen unemployment is still in the double digits, not to mention a second wave of coronavirus is at risk. Record issuance, but troubles may lay ahead for these issuers. Matt thanks very much for that. Dani burger talking about record debt issuance in europe and the u. S. Next, esp provided shelter for the storm for some investors, but flows turned negative for the First Time Since march. Why the sector is still next. Tive wit you doing okay . Yeah. This moving thing never gets any easier. Well, xfinity makes moving super easy. I can transfer my internet and tv service in about a minute. Wow, that is easy. Almost as easy as having those guys help you move. We are those guys. Thats you . The truck adds 10 pounds. In the arms. Okay. Transfer your Service Online in a few easy steps. Now thats simple, easy, awesome. Transfer your service in minutes, making moving with xfinity a breeze. Visit xfinity. Com moving today. Anna welcome back to the European Market open. Half an hour until the start of European Equity trading. We could see a bounceback, positive for global equities. The Asian Session has been moderately positive. The european session indicated up. Futures suggest we will be higher. At 10 00 a. M. U. K. Time, the oecd releases its economic outlook. Its twice yearly analysis of the prospects of member countries. Later, the ecb Vice President speaks during a webinar organized by the institute of International European affairs. Concerns around inflation and watch out for u. S. Inflation data. We will get the cpi number. We had the number out from china overnight. We will be waiting for a Rate Decision from the fed at 7 00 p. M. U. K. Time. Matt let us get the bloomberg first word news. Yields drive much higher, the fed may implement yield curve control according to billionaire money manager jeffrey gundlach. Haver dated treasuries sold off in recent weeks amid growing optimism the economic damage from the coronavirus has bottomed out. The next fed policy decision following the meeting is at 7 00 p. M. U. K. Time, 2 00 p. M. In washington. Legendary Hedge Fund ManagerPaul Tudor Jones says many investors have been confounded by the recent rally. He was among those to avoid downturn stocks in the pandemic. He was looking for havens from gold to bitcoin. Now he says it is time for humble pie. If there was a franchise for humble pie, there would be a mile long line for that because we have all had huge gulps of it. Recordritain has gone a two months without burning coal. The longest the fossil fuel has not been used since the start of the industrial revolution. Reliance on coal has slumped amid renewables. Coronavirusrelated lock towns hit demands for electricity as industry and commerce remain shut. Global news, 24 hours a day, on air and at quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. Anna quite a statistic in terms of the u. K. Reliance on the coal industry or not. Takes us nicely into our next conversation. Esg have been one of the best love segments during the upheaval as stimulus proposals greenovernors including criteria as well as the lowest risk profile esg companies have shielded these companies against hit a, but flows into esg low not seen since march. You. To speak to what is the link between covid19, the way we were caught off guard by this pandemic, and concerns around Climate Change . A lot of people talk about a link, but what is it for you . Good morning. First of all, environmental awareness has not gone a way. We argue it is higher. But we understand the link between human health and planet health. Also, some people do not want government to leave the environment out of the recovery packages for the post covid economy. Call, this as a wakeup that our economy is not as resilient as it should be, and that it should be more in harmony with nature. Int we are seeing outflows esg etfs. You see for the first time in some time. Why do you think that is . Seen quite consistent strategies, but they are we accelerating right now. What we see also is impact among our clients. Withequests for engagement the compan