Discussing enough what the Standard Chartered bank and hsbc is doing where they are saying they are going to agree to whatever with new security rules of hong kong. How big a deal of this in your london . Francine well, it was quite a big deal when they announced it. I think you and i spoke to stephen engle. He reminded us, it goes to show may be the influence that beijing has on some of these companies if they want to have licenses in mainland china. This is actually quite difficult to dig into the deep root of it. Now, we understand that there is a backlash from investors. Just yesterday, we had o aviva, one of the biggest investors in a lot of these banks, saying it is decisionable with the of hsbc and Standard Chartered, it is uncomfortable about the banks decisions. Tom absolutely fascinating what we see their. We have got lots of coverage through this hour and on through bloomberg surveillance. Theill be joined from school of chicago, the former leader of the central bank of india. Right now with our first word news in new york city. Good morning. The oecd warns that the Global Economy will slump 6 this year because of the coronavirus. , outputa second wave could fall 7. 6 . The oecd also warned that governments withdrawn support from visitors and workers now could make the damage even worse. Mike pompeo is blasting hsbc for backing chinas move to impose new security legislation think Hong Kong Test in hong kong. He accused the base in hong kong. He accused the bank of coercive bully tactics against the u. K. The bank is not commenting. Underminingump german chancellor Angela Merkel at a time when she is facing a growing pressure to get tough with russias vladimir putin. President s decision to withdraw almost 10,000 troops from germany was welcomed a month ago. The u. S. Has not officially notified berlin of the withdrawal. The u. S. Navy moving to ban public displays of the confederate battle flag from ships after growing because to address racism. It is meant to uphold the navys core values. 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. This is bloomberg. Francine, tom . Tom thanks so much. Equities, bonds, currencies, commodities. A little bit of flatness in the equity markets. Nasdaq futures up. There is no other way to put it. For of that guesstimates what apple will be doing for the rest of the year. That is part of the mix right now. In the bond market, there is no question yields come in and they come in quite nicely from. 92 on the 10 year over the last couple of days, we have reached below. 80 . What a good conversation with seorge about Foreign Exchange reaffirmation of stronger euro and a decidedly weaker dollar. Francine he was also very good on pound. Stocks are slipping again. The oecd about two hours ago gave a warning on the economy and it seems to just may be have shaken the memory of the markets on the fact that, look, this disease is not over yet, the pandemic is not over yet. You look at dollar, holding a three month low against its peers. Crude oil retreating down. Tom very good. It is an extraordinary day. We will be very much focused on economics toward the fed meeting. There is still an america transfixed by this moment. You see it with cultural announcements and with the Fox Television network show cops. With this, there are symbols. Joining us now, our chief washington correspondent, kevin cirilli. The ultimate symbol of the moment is the set of fences wrapped around President Trumps white house. When does the fence near the church, when does that fence either be moved or come down . The city came out and said sometime within the next week, actually, they are going to reopen Lafayette Square park, which of course has now been the ,e of historic illustration as you recall, in the past week. In terms of where the conversation is moving, there is a senate policing reform bill the Upper Chamber come of course controlled by mitch mcconnell. Was upay, mark meadows on capitol hill with Jared Kushner and some other of the top advisors to the president meeting with senator tim scott, a republican from South Carolina , who also is africanamerican, the only africanamerican senator republican. They are now looking at policing reform. This is definitely something that republicans are now working on. This is how democrats have also come out with proposals of their own. Tom right. But do we know what the president is working on . I reviewed the many tweets and i dont detect a plan. I understand the senator, mr. Scott. I understand the political formedes but for those against the president , is there any demonstrable plan from President Trump . I think there is two areas of agreement. One is the potential to remove the chokehold as a mechanism for Law Enforcement to utilize. Second is to look into the past actions and comments on police officers, particularly those with a history of making racist remarks. T is something that could that there could be consensus on. Also, this idea of Better Police training as well. Beyond that, the president is not going to say he wants to defund police. Even joe biden has said he does not want to defund police. I was struck by some of the out. That came majority of americans, republicans and democrats, are just wanting there to be a period of calm. They want a sense of normalcy. The unrest over the last several weeks is something the administration feels has hurt them at a National Polling level. I think the president , from a political standpoint, is facing the pressure of poor polls against biden. Tom right. Francine kevin, how will the president use the economy . The fact that the u. S. Is now officially in a recession may make it problematic, but we also had some pretty good figures on friday from employment. How will the president use that . Kevin this is where it gets interesting. The National Polls and the battleground polls have the advantage to biden. Trump is still beating biden on whos better to handle the economy. That is their glimmer of hope. That is what republicans are seizing on. When i talked to the sources on the reelection campaign, thats what they tell me. This drumbeat of good and positive reopening Economic Indicators they are going to use as a set up to say, we want to reopen the economy. Democrats want to keep it shut down. Thats where the debate is moving but its all dependent upon the economy moving in the right direction. Francine thank you so much, kevin cirilli, bloombergs chief washington correspondent. Coming up shortly, joseph amato, Neuberger Berman group president. We will talk about some of the valuations out there. This is bloomberg. Good morning. Bloomberg surveillance. Francine lacqua in london. Im in new york on our fed special today. Good conversation, good analysis of what we will see out of chairman powell. Scott minerd will be with us. Has beenor extremely cautious on the markets. Gary stern will be with us. In my estimation, by far the most underrated of the fed president. Alan blinder with us and diane swonk as well. Pulse onnk with that the midwest economy at Grant Thorton will be a timely conversation. At neubergeris berman group, a really interesting shop in new york. Yes, they manage money, but they have a certain panache to it, certain style. We are still waiting for joseph amatos hit movie. It is out there somewhere. He drives forward equity coverage for Newberger Berman uberger berman. Momentum and value. Who is going to win out Going Forward . Does momentum keep momenting or does value catch up . Joseph good morning. Good to be with you this morning. It has certainly been a Pretty Amazing contrast over the course of the last couple of months between quality growth and momentum versus cyclicals. Least, since this crisis has occurred, quality and momentum have won out in a huge way. It is extraordinary that nasdaq is a double digits is up double digits so far this year. Its pretty extraordinary. Russell 2000 value is still down 15 20 . That disparity is still quite significant. We are seeing some of our teams rotate out of some of those quality and momentum names into what i would describe as quality cyclicals. I think as the economy recovers, highquality cyclicals, whether they be in the financial space, industrial space or others, i think are in for a better run here over the near term as the economy starts that Recovery Process that people have gotten so excited about in the last couple of weeks. Martin adams in equities for Bloomberg Intelligence is really quiet adamant that there is a miss estimation about earnings. Is the Market Pricing in earnings recovery are moving up in the income statement in pricing in the shock of a revenue recovery . Well, i think of the markets are certainly i think the markets are certainly expecting that 2021, you will see a strong earnings recovery. Certainly in that segment that you referenced earlier, the larger quality names who had more durability through this challenging period are going to see better earnings recovery. 2020 is essentially a write up for most. I dont think most care where 2020 ends up. In those larger, quality names, i think the confidence level that they will recover to earnings levels of 2019 is quite high and that is reflected in valuations today. At the same time, you move down the cap structure, capsize. I think there is still lots of skepticism that 2021 earnings will be anywhere near 2019. That is the debate in the market right now, which is right now, i think people may be confusing the speed of the reopening with the strength of the recovery. I think we are focusing on trying to assess the strength of that recovery and when you will be able to recapture, whether it is Economic Activity. Gdp dollars of 2019, when do you get back to that level . Francine good morning from london. Is there an assumption in the markets or in earnings forecasts that actually the pandemic is over . Think anyone is assuming the pandemic is over. I think there is definitely a legitimate concern about a second wave. I think the debate about a second wave is whether it creates more shutdown or whether it is isolated clusters that reduce certain levels of Economic Activity but do not have the comprehensive level of shutdown that we saw back in march and april. Science experts expect some level of a second wave. Historically, viruses like this tend to have a second wave. Our underlying assumption is that there will be some level of that but not to the extent that we saw back in march, april, and not having the corresponding impact on Economic Activity. It may affect the speed of that reopening and recovery. That is one of the things that i think everyone is worried about. Francine thank you so much. Joseph amato there of Neuberger Berman group stays with us. We will have full coverage of the federick decision beginning at 2 00 p. M. In new york, 7 00 in london. This is bloomberg. This is bloomberg surveillance. Tom and francine from london and new york. We are talking about market valuations. Lets get back to joseph amato from Neuberger Berman. I look at all the protests in the u. S. , london, and elsewhere asking for more justice and less inequality. Will it change the markets and the Way Investors choose what company they want to be invested in . Are we going to have more indices on diversity . Will it actually change the value of a company because of it . Joseph well, i do think that the Health Crisis and economic crisis that we have gone through is really has really exposed some real challenges and faultlines, if you will, in certainly the u. S. And a number of other economies when you see the inequalities as it relates to income, educational opportunities, health care access, criminal justice. These things have shown to be even more of a problem than they were before. As it relates to investors, we have talked a lot over a number of years about esg investing, sustainable investing. We have had strategies related to those that type of investing for decades now. I think that is going to be an even deeper dialogue with clients as they think about the sustainability of companies that they invest in and Push Companies hard to understand how they are treating their labor force, how they are dealing with some of the issues we have been talking about. It is going to change. It is going to highlight and focus that much more on sustainability and esg. Many investors in the past have felt that is a bit of a theoretical discussion. When now you see the reality of it and i think it is really going to regain focus. Francine do we have the right data for you and companies to actually make the right amount of decisions . Do we have the right data and transparency to understanding what each company does . Juliette it is a huge joseph it is a huge issue. You know, we have been big supporters of increased disclosure. A lot of a proxy questions have come up around increased disclosure as it relates to environmental issues, the nature force. Mpanys labor the more we can get on an equal footing, so we have a big supporters of sustainability, accounting standards have been pushed up. As you look across companies, you can more, and a deeper way understand and determine relative value and how these factors are affecting the company and ultimately, our focus is on the material factors that do affect companies pe rformance. Tom is Neuberger Berman investing around a theme of there must be consolidation, for whatever reason, including all these new social stresses . Do you assume consolidation of the American Corporation . Tom, thatdont think, that has been an underlying issue driving a lot of investment activity. Certainly, there are different forces affecting different segments of the economy, whether you see more consolidation in the Financial Services sector or amongst small and midsize banks or in other elements of the economy. Certainly, when you go through the economic stresses, there are going to be those companies that are going to struggle to survive. One of the both challenges and opportunities of what the fed has done, it has allowed frankly week companies to survive by providing capital and coming in and essentially keeping the Capital Markets open, whether it be for Quality Companies are companies that are struggling more. That may mitigate some of the lidation that you would see. Francine thank you so much. Joseph amato of Neuberger Berman. Bank of italy governor joins us for an exclusive a virtual conversation on the outlook for after then economy covid19 crisis and the response of the european to the pandemic. That interview coming up. This is bloomberg. Francine this is bloomberg surveillance. Lets get to bloomberg first word news. Senate republicans are dropping their own proposal for reforming police practice, including racial bias training, increased use of body cameras and enacting the first antilynching law. House democrats have come out with your proposal and would like to make it easier to sue and prosecute police accused of wrongdoing. This is in response to the killing of george floyd in minneapolis. U. S. Authorities are investigating an attack at the highest scheme traced to india, in an attempt to seal confidential information from investigative journalists and advocacy groups fighting climate change. It is unclear who founded the hacking operation. One of the beneficiaries apparently was the embattled German Tech Firm that says they have not been in touch with any hacker groups. The u. K. Has not seen a time like this since the industrial revolution. They have gone two months without burning coal. The Power Generation has mixed from 40 seven years ago to 2. 5 in 2019. One of the big reasons . Cheaper Renewable Fuels meeting demand. Times,lect a sign of the paramount has canceled the longrunning show cops, a reality show the glorified police work entering its 31st season. Cops ran for 25 years before the network dropped the program on fox. Global news, 24 hours a day onair on tictoc and twitter, powered by more than 2700 journalists and analysts in more than 120 countries. I am ritika gupta. This is bloomberg. Francine thank you. In an effort to combat the market is left its own devices and it has not provided ventilators or therapeutic drugs. Capitalizing on americas private sector requires incentives to produce such social goals. Us, he is an joins nyu professor. When you look at what we have been through and what will happen in the future, willis . Reate a new social contract i dont know if you can hear us, but will this create a new social contract . Roman i would hope so. What i would hope would happen is there would be no pressure action andovernment excessive spending, but there will be more understanding that what we need is a state that delivers social markets. This is not a difficult point to understand. You need to repurpose your production to produce instead of shoes masks. It way the market would do this is there would be demand for masks. The price of masks would go up. Presumably, they would come forward and make investments in production. Of course, it will not do that because once they pay for the production, there is no guarantee that it will last for a long time. That somebody will purchase the masks. The government will guarantee that the investment would pay off. If the market at all can deliver , it would be delayed. And we ha