This is bloomberg surveillance. Im Francine Lacqua in london. A lot of fears in officer while fleeing during an arrest late friday. The police chief resigned hours after the killing and the officer was fired. Three dozen people were arrested after people set fire to the restaurant where the shooting took place. Global news, 24 hours a day on air and on quicktake by bloomberg, powered by more than 2,700 journalists and analysts in more than 120 countries. Im dani burger. This is bloomberg. Francine . Francine thank you so much. Chinas new virus wave, beijing has over the weekend. Chinese Authorities Say risks it will spread are high. Cuomo york, governor warned against triggering the second wave of the virus. He said he would be invoked reimpose shutdowns. Is the us for the latest head of Bloomberg Intelligence here in europe and longtime pharmaceutical analyst. Always good to speak to you. When you look at the possibility of a second wave, cases in the u. S. , cases in beijing, as is linked to reopening the economy . Sam good morning. Know, imthe you not so surprised about the numbers rising in the u. S. , because you see constantly pictures and videos of people Walking Around without masks in high concentration, etc. But when you think about beijing, this is a country that is used to wearing masks. Asia, in general, does that. So, im a bit surprised unless this is an outbreak, although im hearing this is a virus that seems to genetically resemble those circulating in europe. So how on earth a cut into china, god knows, unless it was a mutation that happened there. So, its very difficult to read this. Nonetheless, it shows how capable and sensitive this situation is in terms of how quickly you can get a new infection running. Francine sam, just a we 100 understand, there was a train of errors that kicked off, the first time, end of january. Then did it mutate in the u. S. And europe, and did that virus come back to china . Is it people that had covid that were reinfected . How much do we understand this situation . Sam i dont know any of that detail. All i read and lets hope its not a random piece of information that has come across my feet but at the end of the day, what i read is that the virus seems to resemble the mutations thats being seen in europe. But that could easily have been generated by virus in china. So its difficult to tell whether this is brandnew infection. Is it reinfection . Too early to tell. I think they need to do a lot more analysis to understand. But the point is none of that matters. The fact is its happening. When i go and see people seem to have forgotten theres a virus running around. Francine what do you think that is . There seems to be evidence, maybe not as deadly as first thought. Statisticsknow about about how serious that is . Sam i dont know where that comes from because we need to the number of people hospitalized, you still have a significant proportion of people within community suffering severe fatalities. But anyone that goes to hospital, i doubt the people who come out are back to normal straightaway. There are lots of people suffering for weeks after, so this is not something im going to accept that is less bad than we thought. But at the end of the day, i think usually these viruses tend to take out the most susceptible first. So, we have to be aware of that, as well. Francine what can you tell us about the vaccine . It seems the first wave of vaccine this comes from a doctor wouldnt when i do percent protect against the illness wouldnt when i do percent protect against the illness. 100 at right wouldnt protect against the illness. Is that right . Sam thats based on work done by various groups. Its very hard to tell because we need the human data. Even will beget the human data to get the comparison of the analysis we need to prove that point, its going to take a long time. You need to vaccinate tens of thousands of people and let natural infection take place to tell whether disease is protected, etc. The based on the nonhuman primate data we have seen so far, it does look like some of the vaccine we have seen the data for seems to protect against the bad disease, but doesnt stop you from getting the virus and getting infected. But that doesnt matter, does it . We dont mind having an infection. We get a cold every day, so why does that matter as long as it doesnt kill people . Francine youre absolutely right. Thank you. Coming up, we talk about the shape of the recovery and whats next. Thats coming up shortly. This is bloomberg. Francine economics, finance, politics, this is bloomberg surveillance. Im Francine Lacqua in london. Lets get the Bloomberg Business flash with dani burger in london. Dani oil major will make billions in writeoffs and impairments after reducing its assumption for the price of oil. It is brent trading around 55 a barrel in the longterm. Its also reviewing plans to develop some of its prospects. Spain is to announce a 4 billion stingless program for the Auto Industry today Stimulus Program for the Auto Industry today. The two sectors account for almost a quarter of the nations gdp, with carmakers up 1 5 of exports. Both sectors have been hit by coronavirus pandemic, with the spanish economy expected to shrink by 50 this year. 15 this year. The consumer goods giant aims to zero out all emissions from its own operation, as well as suppliers, by 2039, and its going to show off its work. The labels on the products will show how much Greenhouse Gas was emitted in the process of manufacturing and shipping them to consumers. And thats the Bloomberg Business flash. Francine . Francine thank you so much. The markets sinking today as second wave fears hit investors. Turning us now is the chief correspondent. Thank great to speak to you again. When you look at the possibility of a vshaped recovery, is it up in the air because of a possible second wave . No, i dont really think so. I think the second wave, if there is a second wave, is going to flatten out the v, but i dont think a restore is going to be completely canceled. And the reason is the following. Even if we do have a second wave, i dont think governments are going to put their economies back into this kind of complete lockdown. Because a, the economic damage is simply too great. The longterm damage, in particular. Also, weve become better at dealing with the virus. Globally, even though the total infections were confirmed cases are increasing, death rates are continuing to decline. So i think there are a number of reasons like that. Just to be clear, in the u. S. , the second wave is a really nist is really a misnomer because the first wave never ended. Francine if you look at what the scoring will look like, what you look like first scarring will look like, what do you look like first . Klaus scarring is going to be more severe. It is put in place because they have less fiscal space for a variety of reasons. With the severe beating that theencies have experienced, scope for Monetary Policy is smaller. Lastly, emerging markets tend to have weaker medical systems. So, limitations have to be more severe and longerlasting. We also believe scarring is going to be somewhat larger in the u. S. Than the euro area, so anre looking at more of lshaped recovery. Youre going to get an initial v in the third quarter, that clear. But the reason why it is much a medic in the u. S. Is, first of a verye u. S. , youve had steep increase in on a plummet, and in unemployment, resources are remaining high. But also, we think the u. S. Economy was weaker. We expected a recession for different reasons. The proposition going into the crisis was much worse. If you look at reasons around the world, how do you planning out, given theyre all dealing with the virus when they were at different stages within the Economic Cycle . Course,ell, china, of you got a state sector that is very, very large, and the Chinese Government is quite clearly willing to pump up this economy so the chinese economy is probably the one that comes closest to a vshaped recovery. But i think we should also note that in a vshaped recovery, the loss of output is never made up, only in what they often call a recovery is when you get a rebound. U. S. E initial phase, the and european economies will behave similarly. Its a more when you look further out towards 22 anyone 2022, there021 and will be differences. The situation will be more in their favor if the economies begin closing the gap. Foreven by 2022, we look the european economy to be around to put 5 smaller than the trends we predicted 2. 5 smaller than the trans we predicted. Francine is this on the assumption we dont get a hard brexit, or even if we get a hard brexit or a no brexit deal, its fine because we have this support of action from the commission . Klaus it would be better if we didnt have a hard brexit, but lets not forget whos going to be damaged the most a hard brexit, the u. K. Economy, not the eu economy. Klaus, thankight, you so much. Klaus stays with us. Fed chair jay powell is expecting to downbeat his assessment as he heads to capital will sta capitol hill twice this week. This is bloomberg. This is bloomberg surveillance. Im Francine Lacqua in london. Fed chair jay powell is expected to bring a cautionary message to capitol hill. His remarks to lawmakers will include a downbeat assessment, given last week when policymakers said rates will stay zero through 2022. This performance has gone criticism from larry kudlow for being overly negative. Still with us, klaus. What exactly do you see is the biggest concern in the u. S. Economy . Is it on a plummet . As a deflate is it u. S. On a plummet . Is it deflationary is it unemployment . Is it deflationary measures . Klaus it is an employment. Some people argue that the u. S. Is doing more or less the same thing as europe, that its just a different route. In europe, the german model has been widely adopted, which is the government subsidizing companies so they can continue to pay payroll. Employment. Y in in the u. S. , its different. The u. S. Companies have fired people and the government supporting the Household Incomes through unemployment insurance, etc. But i still think theres a higher threshold to rehire someone than it is to fire someone who has been furloughed. And i think getting the people back into the jobs is far and away the most important challenge. Francine what does this all mean for dollars . ,f you look at dollar dynamics it is probably the one question people will want to know. How difficult is it to see what dollar does, given the uncertainty between the china trade war . Know, ifll, you currency forecasting is a highly peerless affair but no, i think the narrowing of the expected growth differential between the United States and the euro area suggests the euro, which is still on all measures, pretty undervalued at this stage , that it is going to support the euro. The idea there is going to be more scarring in the United States is actually not one that is limited. It is only our view. Was interested and intrigued to see the Consensus Forecast for 2020 has fallen more for the euro area than the u. S. A little bit more. Upward outward division is larger for the euro area than the u. S. So the idea of the damage done in the u. S. Is going to be longerlasting or somewhat greater than in the euro area is actually a pretty wide spread opinion. Francie . Francine . Francine when you look at the chinese economy, our pressures something that could be applied to the rest of the world . Course deflation exporting from china is always a risk. I would be very careful by extrapolating from Producer Prices because exactly as you has been depressed because of a slump in commodity price, in particular oil prices. With chinese goods still facing tariffs around the world, i think in shorterterm, the deflationary risk coming out of china are actually somewhat smaller than they have been in the past, certainly not something you can dismiss. When you look at emerging markets, what is your biggest worry for them . Does it have to do with covid19 or is covid19 not leaving leading to enough Structural Reforms . Klaus i think at this stage, its covid19. Emerging markets are, i think are vulnerable to this. Veryyou think of india, often in the implementation, even if the government conclude and take make the right conclusions and take the right conclusions, very often implementation leaves much to be desired in india. This is a bit of a disaster. The losses and the permanent loss of income in india are going to be very, very large, a percent, 9 , which is a very shades percent, naprosyn 8 , 9 , which is a very big number. Francine Boris Johnson orders britain to shop with confidence. Well discuss risks. Interview with burger king u. K. Is next. This is bloomberg. Francine economics, finance, politics. This is bloomberg surveillance. Lets get to first word news in london with dani burger. Dani china is racing to control a new coronavirus out rake in beijing after the biggest rise in new cases since mid april. Surrounding houses and markets have been locked down. It is the largest test of the country to contain the virus since it first emerged in wuhan. According to larry kudlow, growth in the u. S. Is recovering and there is a good chance of a vshaped recovery. President trumps chief Economic Advisor rejected the more cautious outlook by fed chairman jerome powell, saying his comments had been remote roast that had been r in a speech to the nation on sunday, Emmanuel Macron said the country is ready to turn the corner on the pandemic. Restaurants and bars are reopening in paris, and all schools will resume next week. Atlanta has become the focus of the nationwide black lives matter protest. That is after a 27yearold black man was fatally shot by a white Police Officer while fleeing during an arrest late friday. The citys police chief has resigned hours after the killing, and the officer was fired. Three dozen people were arrested after protesters set fire to the wendys restaurant after the shooting took place. Global news 24 hours a day, on air and at quicktake by bloomberg, powered by more than 2700 journalists and analysts in i amthan 120 countries, dani burger. This is bloomberg. Francine . Francine thank you so much. Lets get to one of our exclusive interviews, nonessential stores in england will be allowed to open their doors for the First Time Since the march lockdown. Prime minister Boris Johnson has urged consumers to return to stores with confidence, but will that he echo will they be fully able to reopen . Alister murdock, thank you for coming in. Murdock, thank you for coming in. What does it mean for profit in the u. K. . Francine. Very much, what it means for us is that at this stage we can open our restaurants for takeaway, and that is what we are doing. So for takeaway and delivery. Not do takeaway and delivery. ,ith very few businesses because someone needs to it isdably marginally profitable at best. Meanine so what does that for what burger king u. K. Will do Going Forward . How many of your overall restaurants have you been able a 30 hit oris it arson are people coming in, and how much do they get in terms of deliveries . We moved relatively early and got ourselves ahead of the curve. Have about two thirds of our restaurants that are open. A number of the restaurants that are not open are in what we might term slightly captured locations, like captive locations like airports, Shopping Centers have not been reopened until now. Think the rate of openings Going Forward really depends on what sort of volumes that we are seeing with people coming back in. The early signs are reasonably we just have to wait and see over the next week or so. Francine have you had to pay leases, or are there is a standby on it . Have your leaseholders given you an easier time he echo alasdair an easier time . Alasdair we were quite controversial and became very early in march and said we were not going to pay any of our rents, and i still stand by the fact that where we have no revenue, no rent. Equally, i cannot be that cynical. Have restaurants that are open and thriving, and not be paying some or a portion of our rent. What we have embarked on a policy of his paying for a portion of rent for the restaurants that are open. Back to therading fullest extent that we were trading before. If you are trading under 80 , you will be undoubtedly losing money, so it becomes very difficult to afford the rent. Which is part of the problem. How do you create something that is fair for both sides of that . We are still very much in the middle of that. I think the next three months, understanding what the government do and what we do and what landlords do, that is critical for the future. Francine does it mean that you are worried that you will have to close restaurants down, and if that is a possibility, when will you make that decision . Thatair that is something we look at. It is not something we would do lightly. I think you are looking at the sort of fluid administration are all forms of administration going on at the moment, both in the Restaurant Industry and largely in the casual dining industry within the restaurant but also the high street longterm has to be less competitive. Are the rents that everyone is paying on the high streets, are they do much . If they are, what can we do about that . Are we able to achieve those he echo or can we are we able to achieve those . Or can we find a mechanism that works for the landlord or not . If we dont and if the landlords become too difficult im not saying that they are or they will but if they become too dogmatic, you will see more you have not been able to reach a middle ground and you will have no choice but to put these restaurants into administration, and that is not what we want. We want to keep as many people and get as many as we people as many people as we can back to work. Francine how close are you to bring some restaurants into administration . Alasdair we ourselves we are not very close at this stage. We obviously look at all the options, but whether