Lets get your headlines for you. Beijing cansles flights and orders schools to close as chinese cases of the coronavirus rise. Infections. New jay powell said the fed will use all tools to defend the economy. Robert caplain said healthcare policies are key to recovery. Indias defense stocks gain after the first deadly clash with china. The first clash resulting in death between the two countries in 45 years. Now we have e. U. Car sales coming out and the drop is substantial as you may expect. 57 is the european car sales drop in may. This comes after the much bigger plunge of 78 in april. Car sales falling by more than half. 57 in may after the 78 plunge in april. Of course that is not unexpected considering the fact that most of the month at least Car Dealerships were closed in many countries in the European Union. Just under an hour away from the start of cash equity trading in europe. Lets take a look at futures this morning. As we said, a little bit of a pause in the risk rally. Tse futures are up a little. Dak futures are down a little. Very little change in futures as investors weigh on the one hand, out of the arriving indianchina border as well as the problems in korea and on the other hand accelerating Economic Data points in the u. S. Like retail sales. Take a look at u. S. Futures after yesterday. We saw the s p 500, the dow and the nasdaq all rise about 2 . You can see futures there taking a pause as well. Very little change on the bigger major indexes. Anna . Anna interesting to look at what is going on. Talk about how the futures have all of these conflicting pieces that is th and reflected. We have concerned around a second wave and geopolitical tensions as you mentioned in various locations, predominantly in asia and worth a mention. Contrast that with some of the more positive data were getting from parts of the economy. In the u. S. , sealts sales yesterday. Car sales for europe, in the u. K. , inflation slowing to half a percent matching the median estimates. Hat is pretty much expected. Onflicting crosswinds around geoconflicts. Yesterday Jerome Powell was talking took into account extent to which the u. S. Economy had ottomed out. Well from him again. Wall street making decent gains on the back of some of that data. Lets get to bloomberg first word news. The u. S. Economy still has a long way to go. That is the message Jerome Powell gave while testifying before the Banking Committee and said they are likely to see a period of significant improvement but leave the markets well short of the levels seen before the pandemic. The first state was the shutdown. That produced very sharp declines in Economic Activity. That was q 2. We may be reaching the bottom of that now. Anna china is escalating its virus containment measures in beijing closing all schools and shutting food markets as iting struggles to halt a new outbreak that has already spread to provinces. Only residents who test negative can leave the city. German chancellor Angela Merkel does not expect the e. U. To agree on the Recovery Plan until july. The Program Needs to win the backing of of everybody. Leaders debate the plan for the first time at the summit on friday. Global news 24 hours a day on airpowered by more than 2700 journalists and analysts in more than 120 countries. Matt . Matt asian stocks drifting a little bit today along with european and u. S. Futures. Looking for a sense of direction with encouraging signs of Economic Data out of the u. S. Sales, stimulus. Increases in coronavirus cases. The possibility of a second wave in places like texas, florida and maybe most importantly beijing. Ining us now is a guest from our team in europe. What do you think investors need to see to go one way or the other . You know, matt, i think the second wave of fears are coming to fruition and that is very worrying. Investors are probably looking once again for more signals from policy makers that they have their backs. This is the reality that we live in today, that investors every time they see something wrong with the markets, the first thing is looking at policy makers and the question what are you going to do now . The unintended effect of this wall of unprecedented stimulus from the fed and other Central Banks in this period where they are coming in to rescue the markets and rescue investors. That is effect sweerg. Once we see a little bit of a pullback, the first instecked in markets is to ask what can Central Banks do for me now . Anna some of the data has been impressive. Maybe that is not the right word. Maybe we should expect a big bounceback in retail sales as the u. S. Economy opens up. Retail sales in the u. S. Have a momentum even if the data was in a really big hole. That hole is not as big of a hole as it was though. Absolutely, anna. What we are seeing here is evidence of pentup demand among consumers. The fact that they have been locked up for months and months definitely helps create a bigger buildup. Now that they have been able to go out a little bit to the shops. They have been locked down last few months. Now that were seeing a little bit of reopening it is encourage to go see that pentup demand is still there. The question is how will this square up against fact that we are seeing signs of a second wave and we are seeing the possibility of lockdowns being reinstated or at least reopenings being scaled back. You have to wonder what that ill do to this pentup demand. The question would be would a reinstatement of lockdown or scaling back of roping kill the demand that were seeing . Matt todays question is whether l brexit rock the world once more . Is anybody going to care about brexit again . Is it really going to be an issue . It is very difficult for investors to make brexit a big deal given that we have seen so many versions of this movie. The brexit sequel lab flop because we have seen time and time again the cycle of the process coming to a head and then the negotiationors coming to some kind of agreement last minute so you could see that investors might be a little bit complacent because were hardly seeing any hedging around the deadlines here. It is not going to be something that rocks investors worlds but in conjunction fears of a second wave and Central Banks are at full throttle in terms of their Monetary Policy abilities, were kind of in this conjunction of different risk factors. You have to wonder whether brexit might have a bigger effect on markets than it could have been because we have all of these other risk event s that arehappening simultaneously. Anna thank you very much for joining us. Coming up on the program, fed chairman Jerome Powell is giving a cautious assessment of the u. S. Recovery. More on that. Well have a kg about the trajectory, the path of recovery for the u. S. This is bloomberg. Anna welcome back to the European Market open. The asian equities have been way down. We see a little weakness in futures. Fed chair Jerome Powell said the u. S. Economy has a long way to go before it reverses the damage done by pandemic. Second wave concerns are giving some reason for caution. In the united states, florida reported record new infections. China is escalating containment measures in beijing. It grappled with how the stop a rowing outbreak. Thr than 1,200 flights have been canceled in and out of the Chinese Capital. I want to start with some of the economic backdrop to your strategy at the moment. At do you make of the latest data coming out of the u. S. Es g up in the right bouncing up in the right direction. How do you interpret it . Signs ofrst sivepbs the Consumer Sentiment helping to grapple out of this crisis is very encouraging. I mean, obviously matt do you expect that to continue . It is not exactly up to levels it is coming from obviously a very low base. It had to rise. It would be unbelievable if it didnt, right . No, absolutely. If you think about europe and think about shopping malls and what we have seen there. Shopping malls down 4070 . In junk back up. Minus 20, minus 30. I think the biggest difficulty today is untangling the difference we have seen the effects of lions being let out of the cage. People finally being free from lockdown, stuck seeing four walls. A realistic level of consumer behavior. Anna i wonder where that leaves us when we think about a second wave as well. Jerome powell said the u. S. Economy has bottomed out. One hopes that is case. If we do see a second wave, i guess to say the economy has bottom out, you have to make the asthauges the quality response in terms of lockdown is very different. E wont see large lockdowns. There has to be sunshine if you say we are through the worst of it economically. Absolutely. At this point, trying to make a call economically is challenging. That is why there is this alphabet soup in term ovs what financial shape the recovery we see. All sorts to have alpha bet have sited. T started off in mid may where i found his statement remarkable. The language he was usesing. Were not out of ammunition by a longshot. Have we ever heard of a central bank saying there is no limit to what we can do. Thats why i think on one hand it is very, very challenging to understand the path of recovery but on the other hand if you take a step back and think about what is going on right now, i mean, it is absolutely unprecedented. I mean, it is almost like Global Pandemic has hit us. Were all in the same shoe and you know, the leaders to have world have called in every super hero they can think of. We have batman and superman and wonder woman and ironman and essentially, you know, these guys are all put in a room flexing their muscles and they are being told do whatever you can, whatever it takes to sort this out. And in real life, what am i talking about . Im talking about uncharted territory. Essentially a Global Coordinators central bank efforts. The numbers were talking about are remarkable. 3 trillion of stimulus in the u. S. Over 1. 3 in europe. What were seeing on the fiscal stimulus sides is more important, especially for the shortterm. It is one thing telling Companies Start borrowing and start investing and telling households to stop saving money because of Monetary Policy but until they figure out how the solve holes in their cash flow, that is quite challenging. It really starts to move the needle. Matt does it concern you that some central bankers, for example when we hear from powell, there is so much uncertainty. There is really what seems to be a blind spot in the outlook. He seems to be throwing things at the wall to see what will stick. 5. 5 billion in e. T. F. Purchases and then starts buying the underlying Corporate Bonds really without any reason that we can discern. Is that worrying at all . I think there are two sides of the coin. On one hand, youre absolutely right and on one hand it signals a sense of panic. He is research referring to second half recovery if a second wave a second half recovery but in order to really recover, second wave needs to be contained. Obviously the vaccine need to be developed quickly and be accessible. On the other hand quite tim simply the reason he is being so outspoken and rapid in his statement is because he is essentially looking into the eye of his audience of asset allocated Fund Managers etc. And ying to them, guys, this greenspan put is still very much alive. I will we will continue to provide support which will allow you to allocate this and continue to invest into the market and have the story to tell your clients about why you doing so. I think it is more than just the u. S. What im particularly startled by is what is happening in europe. Think about the day the euro came about going back to 1999. Since then, the European Union has struggled to be on one page with regards to sort of the fiscal approach to things. The l know, since it was polarizeation between Eastern Europe and western europe has been enormous. Anna well pick up on that shortly. She stays with us on the program. Coming up, healthcare has posted gains in europe where other sectors have struggled but do those sectors offer the same opportunity . This is bloomberg. Anna welcome back to European Market open. European equities showing more signs of life than they were half an hour or so ago. We still have ho minutes to go until the start of the European Equity session. Three months into europes outbreak, is healthcare the best place to put your money . With that in mind, i want to ask you about stock issuance. We would normally as you point out, see a lot of Companies Issuing equity at this point. Some may be delayed by government support. Do you think well see a wave of new issuance coming through . We have seen some already. Absolutely. Here are two counts. Companies raising through a position of strength and companies raising through a position of weakness. If you think about running a business which is covid vulnerable, if you see the rate at which share prices have recovered, it is an fantastic opportunity to beef up your liquidity and be in a position where you can consolidate and go shopping and come out much stronger with a much greater market share after covid. You also see cash burning areas of the market with the biotech sector. A fantastic opportunity. A lot of share prices are making all time highs. Why not again increase the liquidity buffers. What i think is going to be an interesting moment as you say is sure, matt i think it is interesting. You asked the question which counterparty can be a reliable partner in a crisis in order to find real alpha. Where are you identifying opportunity . Yes, i think do your upon the earlier on, obviously health and tech has been amazing. How much longer can they run and to what extent do you need to look at areas to extract alpha . On the topic of healthcare, one would agree if we look back on this period, it has been a at he moment of innovation, digit alliesation. Thats why i think if you are in those domain areas that enormous amounts of Earnings Growth which we could see continue to support it. If you are a company which is proven to be a reliable counterparty in a moment of crisis then the very that the chance there is that client also keep you going. Matt thanks so much for joining us. 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 uropean market open. Starting to look a little bit more positive. Lets take a look at what we are looking ahead to today. At 10 00 a. M. London time, well get the eurozone final c. P. I. Readings for may. They will be questioned about timulus proposals. That will be an interesting exchange. Opec publishes its monthly report and at 3 30 this afternoon well get the e. I. A. Weekly reports on u. S. Oil. Jerome powell delivers his Monetary Policy report to the Financial Services committee. That will be the second day that well hear extensively from Jerome Powell and Englands Premier League returns. Games will be played without spectators. Policy makers are expected to cut their key rate for an eighth straight meeting to a record low of 2. 25 . If youre not watching the football rkt you can watch the ian il jan brazil financial meeting. I felt strongly that after severe on contraction for the first couple of months, first half of this quarter, that we probably bottomed out in sometime in early may so we expect growth to continue to the end of this quarter and into the third and Fourth Quarter and i think the surprise in the jobs number as strong retail sales is part of that narrative. Were going to grow pretty strongly from here. Lets dig more into what you just said. Is this going to be perhaps a faster recovery than a lot of people have been looking for including people in the fed . Possible. There is Downside Risk to the recovery and upside. And a lot of which it is going to be in my view at this stage, is going to have throse do with monetary and fiscal policy and a lot more to do with how effectively we execute the healthcare policies. I know youre not a fan of negative rates. There was an opinion piece on bloomberg this week. They said you guys are making a mistake. That negative rates boost employment and help businesses and encourage lending to go up from banks and people can invest where they can make money. He said that by not doing this youre favoring banks over people. Whats wrong with this asht . My concern is that nfl when i look at the performance of negative rates outside the u. S. , for me at least, and i have studied it as carefully as i can, the jury is out as to how effective they have been and whether they have actually helped growth. In addition, there are side effects to negative rates. Negative impacts on the financial system, also we have a very large money Market Industry in this country and Many CompaniesAccess Commercial paper which depends on a healthy Market Industry and my concern is negative rates may do more damage and have more side effects and it is not as clear to me what the benefits are. Ok. I want to ask you one more question about yields.