Good morning, everyone. This is bloomberg surveillance. I am Francine Lacqua here in london. The markets are really focused today in the u. S. , that second wave, we were debating on whether we could call it a second wave. Big resurgence of cases. Alsos are down, futures down. Rates, but also because jay powell talking about the economic a coverage. Rebounding from the losses we saw yesterday. Gold actually holding after most of yesterdays gains. Now lets get to the bloomberg first word news in london with dani burger. Hi, dani. Ani hi francine. ,californias hospitalizations are the highest in nearly a month. According to Johns Hopkins university, the number of confirmed cases have top 2 million. The government made a string of failures and is handling of the coronavirus crisis. Executivemedical spoke about the decisions at the coronavirus briefing. It put Boris Johnson standing next to him on the defensive. Johnsons that is still too early to judge the nations response. Just eat take away has agreed to by grubhub. It would create one of the largest Meal Delivery companies and give the European Company and entry into the u. S. Market. The purchase also sidelines uber, which has been a takeover talks with grubhub for months. To unify itss structure into a single parent company. It currently has two entities. Goods firmsumer thanks unify under the u. K. Company will be a significant benefit. It reverses an earlier plan to consolidate in the netherlands. Global news, 24 hours a day, on air and quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. I am dani burger. This is bloomberg. Francine . Francine dani, thank you so much. Bond buying and zero rates are not going anywhere for a long time. That from fed chair jay powell. Chair powell the extent of the downturn and the pace of recovery remain expert merrily uncertain and will depend in large part on the virus. Using ourmitted to full range of tools to support the economy in this challenging time. Discussedes we include explicit for guidance and asset purchases. We also reviewed the historical and foreign experience with targeting Interest Rates along the yield curve. Whether such an approach would complement our main tools remains an open question. We are not even thinking about thinking about raising rates. After the crisis has passed, we will put these tools back in the toolbox. The report was surprising. We are pleased. We hope we get many more like it. But we have to be honest, it is a long road. The rising joblessness has been worse for lower wage workers and women, africanamericans, and hispanics. There is no place at the Federal Reserve for racism, and there should be no place for it in our society. Francine lets get to our big interview. Scott minerd says the rally should go to the Federal Reserve, but the partner at Guggenheim Partners wars there still a great deal of uncertainty. Scott it does not matter which piece of data you look at, there is still a very high level of uncertainty, especially as we reopened the economy. Some in 19 states now are covid,ncing spikes in and those are mostly the states that open first, so i think they , be subject pause to a lot of uncertainty right now, at this point, and there is only so much the fed can do through the operation of Monetary Policy to address the issues other than to make sure the markets are liquid, and that termbasically maintain a structure of Interest Rates low enough that it does not interfere with Something Like mortgage rates, which would damage the housing market. Scott minerd, tom keene in new york, good morning to you. You wereutely dead on in february on the decline, you called it the ludicrous season. It has now become a ludicrous 2020 with this huge and abrupt recovery we have seen. Can you give chairman powell all the credit for this 44 move up in equities, or is there Something Else going on . I thinkou know, tom, that chairman powell probably deserves the majority of the credit. I think that, you know, we were in the midst of a rally, from , that looks lows like a correction in a bear market, until april 9 when the Federal Reserve announced aggressive policies in relation to dealing with Corporate Credit and the etf purchase program. Has supportedlly, the rally. When you look at the correlation between credit spreads relative to u. S. Treasuries and equity prices, that correlation is sotty robust and very tight, i think the fact that the fed managed to drive credit spreads tighter, has basically given the supports for the equity market that, you know, basically the signal was, we are not going to let companies fail, so you may as well jump in and get involved. Michael scott, it is mike. When you look at how the fed has brought everything in, and they are going to continue buying at the same rates, is this a little bit like shane, jay powells work here is done, they do not really need to do a whole lot more . Scott mike, there are two issues. The first issue is the fed is stuck being an intervention is now, simply for no other reason than they have to interventionist now, simply for no other reason then they have to provide u. S. Treasuries now. You asked an interesting question earlier is there really anything the fed can do to address the problems . Is i think, really, the fed stuck financing the u. S. Government, because of the size of the deficit. When you look at credit, however, credit spreads have the time, 40 of tighter 60 of the time, however you want to think about it. That is a pretty normal spread for credit. I am not sure that the fed is really finished in terms of what it wants to achieve, and terms of tightening credit spread. I think the jury is out there, and one of the big reasons for that as we have yet to buy any Corporate Bonds under the Corporate Bond purchase program. Theres so much demand for credit at this point, from the investment standpoint, that we probably will end up driving credit spreads in, and it will be supported by the fed. Francine that was scott minerd, cofounder of Guggenheim Partners. Coming up, with a second wave on the way, texas reports the highest number of daily cases since the pandemic started. California hospitalizations jumped to the highest. We have got that shortly. This is bloomberg. This is bloomberg. Francine economics, finance, politics. This is bloomberg surveillance. I am Francine Lacqua here in london. Now, lets get straight to the Bloomberg Business flash, heres dani burger. Hi, dani. Dani hi, francine. Heading for a lengthy probe of their merger. Sources told bloomberg, an executive sees the European Commission expanding the investigation, pushing the deadline for october. Oneyear putting a pause on use of its facial recognition software. It is a major push for a company that has been a defender of the controversial technology. Amazon plans to give them time to regulate the software. It comes after protests of Police Brutality after the killing of an unarmed black man, george floyd. In the u. K. , an estimated one billion pound hit from the coronavirus cases. According to deloitte, this amounts to about 500 Million Pounds of lost revenue for this Financial Year for soccer clubs. That extra 500 million will be deferred to year. That is down to broadcasters and lost business sales. And that is your Bloomberg Business flash. Francine . Francine thank you so much. Stock futures are lower as coronavirus cases in the u. S. Are rising. Texas reported the highest number of daily cases yesterday since the pandemic started. Californias hospitalization cases are the highest. According to Johns Hopkins university, the u. S. Cases have topped 2 million. Adding to a lot of unease in the markets, given the caution from the fed. Joining us today as a Maya Bhandari, executive director at columbia threadneedle. I am happy to have you on the program for insight and perspective. When you look at what is going on in the market, how much of it is fear of a second wave, that is not quite priced in, and how much is looking at what fed chair jay powell says, and how he was so cautious . Maya good morning, francine. I think it is a combination of both of those, but perhaps more importantly, the fact that the markets have gone quite a long way already. Equity markets and credit spreads have recovered about twothirds of their losses since the march low point, considerably less on offer. If we look at Global Investment grade, for example, this morning , deviations cheap relative to history versus 2. 5 standard deviations at the rise of march. I think there is a little bit of profit taking here. I would say, though, from my perspective at columbia threadneedle, there are two or three key reasons that keep us favoring direct highquality risk assets within equities and credit, and one of the key reasons for that is policy and policy support, both monetary and fiscal. Out, jay powell yesterday emphasizes the dovish commitment in the u. S. Europe have all gains, andpped their support of the economy to reopen and recover. To our mind come up with the artillery of measures, addressing and ultimately resolving some of the dislocations that covid has brought with it. Francine maya, what does it mean for, you know, do you think there is a correction due . Given some of the things that you said, do you think we will actually just catch a breath now . Maya i think it is the latter, catch a breath, but one of the things we have been focused on at columbia threadneedle is increasing the quantity of risks, it is very important, but also the quality of risks that we take. To participate in some of the Higher Quality risk assets out there, i mean, lets not forget we have a lot of policy support, but i a lot of companies are going to be in worse condition after we are through this crisis come up Balance Sheets that are in worse shape, so from our perspective, focusing on the Higher Quality pieces of risk markets has been really central here. Maya, do you make a difference from where the Company Actually stops or where it is based . Its it make a difference if is europeanbased compared to asiabased or emerging markets . Maya absolutely. We favor, much as when we spoke the last time, we continue to favor u. S. Quality Growth Companies where many of the secular trends, for example, have actually accelerated as a result of this crisis. And we hold the u. S. In a bit of a barbell with asian equities, which is, of course, asia is coming out of the crisis quite quickly. Chinese data about the precrisis levels in many areas. We are neutral european equities come along with japan and the u. K. Cyclicality in our portfolios, participate in Higher Quality assets but less cyclical exposure. Francine francine what do you do with gold right now . Maya gold has come quite a long way. Gold is an asset that my colleagues in commodities favor. When wethink certainly think about gold or we think about some of the base metals, they seem much better supported, to our minds, than, for example, oil, notwithstanding some of the supply cuts that we have seen in the last several weeks. The market remains quite considerably oversupplied gold and base metals in a very different position. Thinkne i know you monetary and fiscal response in developed markets has been extraordinary. Do you think they will have to do more, and can they do more . Well, i think it has been extraordinary. I mean, francine, what we have had both in the u. S. And europe, we have had months or quarters to be rolled out in the great financial crisis has been rolled out in a matter of days. I think the fed last night certainly left the door open for further increases in its asset purchases. They committed to maintain at least the current pace, which is of course the peak that we had the fed has left the door open to further stimulus. We will learn, on the fiscal side, a little bit more from europe today, on the european stabilization front. In that think the moves direction have been in a positive, increased stimulus direction, so, yes, i think Central Banks and governments across have shown a great willingness and commitment to do what it takes, and to our minds, you know, the measures that have been taken have already been very significant and probably are enough to stop the doom loop. Countriessts have recovering in somewhat of a us hape, so we are not in the v camp. The u. S. Recovered last year, gdp levels, only at the end of 2022, much like the fed, and in that environment, there is room for more. Francine maya, thank you so much, stay with us, Maya Bhandari, who stays with us. Coming up, a huge fight. Just eat takeaway to acquire grubhub when the Delivery Market heats up. Coming up, we will talk about valuations and possible m a activity in the markets with maya. This is bloomberg. Francine this is bloomberg surveillance. I am Francine Lacqua here in london. Still with us, Maya Bhandari from columbia threadneedle. Maya, we talked extensively about the markets, what was priced in, and what would happen to them. At the world, at least at the g7 countries, what do you do with the euro . About european equities being something of a cyclical market, of which we are, at best, a neutral. I think some increasingly favor the euro, the announcement of the unified fiscal plan and the perspective flows attached to it is really quite important. Achillesses europes heel, if you like. Although it is small so far, it for the countries for which it will be allocated. Of course, it is open to increases further along the way. I think it adds to what has been remarkably and perhaps surprisingly constructed fed policy in recent weeks, interesting extension in the past, more supportive german fiscal policy, for example. Two other facets i think support the euro here one is relative Monetary Policy, and the second, albeit a longerterm one, is a surplus. I think europe is one of the few areas of the world where we see an account surplus, and when we think about the flows coming into european markets as a result of some of the fiscal moves we just spoke about, we can see some strength coming into the euro going forward, and we have expressed that in our multiasset portfolios in recent weeks. Francine maya, i do not know whether brexit and the fact that negotiations on going so far, from our understanding, if it will change anything, either on the euro, on the pound, or on assets. Maya well, on the pound, i mean, the pound is currency we actually downgraded recently. Again, we kickback our exposure to sterling and multiasset portfolio at columbia threadneedle. Three headwinds. The first would be a greater odds of no deal. I think that is just a timing thing, as the clock ticks on, odds are there are no deal, increasing. Exit, perhapswn further with some of the problems we are having around track and trade. And third, the mere prospect of negative Interest Rates. Now, while it is not our central expectation francine maya, thank you so much, Maya Bhandari from columbia threadneedle. This is bloomberg. W . W . Uhiono francine economics, finance, politics. This is bloomberg surveillance. Lets get to first word news with dani burger. Dani a second wave of coronavirus cases in the u. S. May be emerging. Yesterday texas reported the highest number of daily cases since the pandemic started. California sets but s california hospitalizations are the highest in nearly a month. The number of confirmed cases in the nation has topped 2 million. Scientists says the a longe u. K. Made list of poor decisions at the daily rifle virus briefing that put Boris Johnson standing next to him on the defensive. Johnson says it is too early to judge the nation separate response. Japan and france have agreed g7 should issue a statement about their worries over hong kong. That is according to japanese broadcaster nhk. Tokyo and others have expressed concerns about the new National Security legislation. It could see people and companies in hong kong a greater risk of arrest and prosecution. Blowoutommodities had a start to the year. A generation of 1 billion since may. Much of the push comes from oil trading. It was correct it was position for a collapse in prices. Global news 24 hours a day, on air and at quicktake by bloomberg, powered by more than 2700 journalists and analysts in im than 120 countries, dani burger. This is bloomberg. Francine . Francine thank you so much, danny. In europe, ecb policy makers tiptoed in a debate whether they will need to boost monetary stimulus again, days after the emergency Bond Buying Program was doubled. Executive Board Members reiterated they will react again if the economy and the inflation outlook deteriorates. Banks echoed by saying the is so active because Inflation Expectations declined so fast. He commented on the outlook for the italian economy. Here he is. Reforms. Uncil needs recently a number of statements about what kind of reforms, and and think that we should it is right. It is a long time for this to take place, but it is not ofause there is a purchase lagging behind. You need firms to increase the rate of growth in the economy. Cannottary policy increase because of the economy purchase. The use of level reasons, reducing the level, reducing the gap,