Hitting stocks. Wall street falls as the virus weakens the recovery. S p slipping, led by energy, financials, and industrials. Lets get started with a check of the markets. We are seeing u. S. Futures flat, after we had a solid risk off session in new york. We had a resurgence in virus cases and news the white house is weighing tariffs on european exports. We have the imf downgrade of the 2020 Global Economic forecast, so the s p 500 saw its largest fall in almost two weeks. All 11 sectors on the s p 500 sank. The nasdaq composite falling for the first time in nine sessions, down more than 2 , halting the longest winning streak of the year. This, as we continue to get more political news on how the coronavirus pandemic could affect the political schedule Going Forward towards the november elections. Democrats, saying state delegations shouldnt attend a convention. Saying they should work remotely. Pressure coming not only from the fragile economic recovery that also u. S. Crude inventories rising for a third week. Oil seeing the biggest drop in almost two weeks. Gaining a little bit of ground at the moment, above the 38 per barrel. Imf saying the Global Economy will contract about 50 more than what it projected even two months ago. It could be on the verge of a depression if a second wave of coronavirus takes hold. Our Global Economics and policy editor is here with the latest. Grim inf economist was her outlook. The imf started worrying after they made their april forecast, which saw a decline in Global Growth, that might have to downgraded further. The chief economist talked about the lockdowns hitting production and supply, being disruptive, and in the end, cutting demand. Here is how she explained the reduction they made, a drop of 4. 9 in 2020. , lets listen to her own words. What we are seeing is that in the first half of this year, when the lockdowns were most severe, the impact on economies was worse than we anticipated in april. That was one factor. The second factor is because there is still no medical solution to this crisis, we are expecting more persistent social distancing into the second half of this year. An combination will have effect on Growth Potential for economies. These are some of the main factors behind the downgrade. Economists and officials and policymakers around the world, she said there is a high degree of uncertainty around the forecast. She sees the risk of another depression. She does. She see up he sees upside risk. She sees upside risk. There may be treatments and vaccines. We may see more treatments. This could help global economies, individual countries have a faster recovery, but the Downside Risk with so many people fearing in the light of the latest virus numbers in the u. S. And around the world, more waves of infection. This puts a damper on demand because in lockdowns, you cant go out and spend. Financial conditions tightening, you get stressed. She compares the current economic downturn with a 10 loss of global output in the 1930s. That was around the time of the Great Depression. The case we simulated of a second wave would generate basically zero growth in 2021 as compared to five point 4 growth in 2021, which we are projecting. Shaped is the classic l nonrecovery. That would be a really dire outcome. We would get closer to Great Depression levels. L shaped recovery, nobody wants to talk about it. The l is not the same letter as a v. Talking about the roughly 11 trillion of emergency spending that has been committed, put in place by countries around the world. It is good, except it will push the global debt ratio above 100 for the first time ever. High global debt means more bonds being issued, higher yields potentially. That is the down the road concern. Right now it is how bad the downturn will get. Growth outlook looking like when it comes to individual countries . Are there bright spots . Developedrall economies are probably going to suffer more than emerging markets. This chart, you can see what the world will do. Down 4. 9 , almost twice as big as the previously forecast 3 drop. U. S. Down 8 . The euro area down 10 . Japan is seeing almost six points almost 6 . China is the bright spot, a 1 gdp gain this year instead of 1. 2 . Emerging markets more broadly, that number for the group is expected to see a decline of 3 this year. Previously it has been had been smaller at 1 . China, 1 growth is almost as bad as contraction for other countries. However you look at it, unless some positive surprises coming the second half of the year, the world is heading for some pretty negative numbers. 6. 1 growth last year for china, our Global Economics and policy editor, kathleen. We will hear more about the Global Outlook later this year. Talking strategy and markets rebounding. This is bloomberg. Shery here are the first word headlines. Fears are growing of a new wave of Coronavirus Infections in the United States. The governor of texas, warning of a massive outbreak underway. Cases have been spiking across the country, forcing local leaders to reassess plans to reopen economies. This is despite pressure from President Trump. A model from the university of washington sees u. S. Fatalities surpassing 180,000. In tokyo,ases workplaces seen as the focus. Authorities reported 55 new infections, the most in a single day since may 5, when the capital was under a state of emergency. The pandemic romped ted the imf to warn, it now sees the japanese economy shrinking more this year than during the financial crisis a decade ago. The fund sees a contraction of almost 6 . South korean activists stepped up propaganda against the north, sending antiregime leaflets across the border. This comes after warnings of potential military action, but after kim jongun ordered forces to pull back from confrontation. Activists sent balloons carrying 500,000 leaflets, u. S. Dollar bills, and books denouncing the north. The High Mountain border clash between china and india is heating up again, with beijing making new allegations that its thatbor provoked the clash left at least 20 soldiers dead. The foreign ministry, trying to claim the incident happened on the line of control and Indian Forces entered chinese territory illegally. The sides have agreed to deescalate the tension. Haidi u. S. Stocks slumped as investors grew anxious about the resurgence of virus cases in multiple states hampering the broader recovery. The s p rally has stalled. It looks to be fighting an uphill battle from here. We are stuck in wait and see mode as we see the 200 Day Moving Average and staying firmly in the midrange. Bound tradingow Action Holding for a while, that could see some difficulty breaking through to the old highs. Lets bring in a portfolio manager, who joins us now. Great to have you. We are finally seeing investors, i guess, stumbling as we get worry continuing to build . I couldnt agree more. At some point, although we are positioned to respond, we expect to see a trading range as we earnings and as increased cases come up and we have the elections coming up later in the year, all of which will be in focus for investors as we navigate the next months. So farwhat we have seen that has driven the dislocation between the economy and the markets has been the guarantee of plentiful support from the fed and other Central Banks. Are we starting to see the diminished return in terms of sentiment in the market . Perhaps. In addition to the fed, clearly we have had great Economic Data, the less bad has been good, the retail numbers last week were terrific coming off a doubledigit decline in the prior months. We had a doubledigit gain last week reported for the month of may, which indicates the consumer is coming back. That would be another plus in addition to the fed backstop. Again, as you mentioned, there is a lot to navigate through. This is a heavy economic week as we have economic numbers coming up over the next couple days. We have sentiment numbers coming out friday, and those will be important to see if that follows through based off, based on the retail sales last week. Shery those sectors that look like safe havens during the pandemic, like tack, like tech, are looking more overextended. The nasdaq 100 has soared above the average and is similar to a level at the prebear market. Where do you go from here . We would argue to continue with those sectors. It is a great description, extended. The ability of those companies to with strand withstand a bumpy recovery, we believe, are worth paying up for. Continue to be specifically software services. We have a bit of an overweight to health care specifically and medical devices. Shery as we head into another earnings season, what should investors be asking as we hear from these companies performances . We have so Many Companies that have suspended guidance. I believe companies will, if they start even guidance again giving guidance again in the guidance isnt what we expect, and you see the market at risk, i think recent Business Trends companies have experienced, as locales open up in the u. S. And abroad, that will be important to sustain the market at these current valuation levels. Haidi how do you hedge the great uncertainty that the rest of the year continues to hold . We are seeing recovery when it comes to the opening up stocks and even they stumbled overnight. Where are you finding opportunity and safety in the market . Us, we are think for not trying to predict what the outcome will be as we navigate through the earnings season or Economic Data. We rely on our process. 2950 level, momentum pulled us back into the market. We had risk off in february, early march. We started putting money back to work in late march, early april. We wont try to rely on prediction. We will rely on process. Overweight equities and we are leaning into the u. S. , we added international and we are aing fixed income against downturn in volatility. Shery rebecca, always great having you. You can get more stories you need to know to get your day going in todays edition of daybreak. It is available on the bloomberg at anywhere app. You can customize your settings. Coming up, coronavirus cases are spiking in the u. S. , with the governor of texas reporting a massive outbreak. We will have the details, next. This is bloomberg. Shery tensions between the u. S. And china continue to rise. We are getting the latest headlines crossing the bloomberg with the director, the fbi director saying china is the most comfort hands of threat to the u. S. The fbi and the fbi has 2000 active probes that trace back to china. This coming at a time when President Trump is also saying he got billions out of china, and gave much of it to farmers. Lets bring in emily in washington with more on the rising geopolitical tensions between the u. S. And china. There seems to be a consensus in washington that china is a threat. Something we have been hearing more and more from u. S. Intelligence agencies, something we are seeing reflected more in washington politics, concern about chinas role in a number of areas. Everywhere from the south china sea, trading, tariffs, the coronavirus. How thed we dont know virus emanated from wuhan, but it is something the fbi is looking into, something trump has called to look into and Many Republican senators were support him on. We see virus cases continue to build across the u. S. What is the latest . There is concern that the effort to flatten the curve when it comes to, in houston, it is not working. The mayor of houston suggested cracking down on those not following the rules, naming and shaming them. This is happening as texas is one of the states where new infections or hitting record levels. We are seeing that in florida, california, high levels in arizona. Some of these places have opened up and are now seeing an influx of cases. Comeshard to know if that from the opening up, from people who are not following protocol, wearing masks, but other states have started to respond. New york, new jersey and connecticut will require visitors from hotspots to quarantine for 14 days. You are seeing states respond to other states where you are seeing an increase in the number of cases. Breaking on the terminal, the democrats are now saying the state delegations shouldnt attend the convention, they should do the convention and work remotely. We have heard the possibility that the results of the november election could be delayed. Where are we when it comes to the schedule of the political agenda this year in the United States as we continue to see this resurgence of virus cases . Thingsyone who thought thought we were going to get a clear act answer on election nights need to Pay Attention to major races that havent been called and arent expected to be called for weeks because it is going to take time to receive and tally the number of absentee ballots. Covering elections has been interesting. Normally, there is tension and excitement on election night. Now, that is being dragged through the week. Dont expect this november to look like other novembers in that regard. This is something that may take time to make sure everyone can vote and everyones vote is counted. Emily with the latest. Citigroup says it has seen worrying signs in asias Consumer Sector as the virus continues to weigh on sentiments. President warned consumers in asia are far from firing on all cylinders. She discussed how u. S. Consumers are faring amid the crisis. We have been surprised, while we had about 2 million or so customers who signed up for relief programs in the state, a large number of them carried on making payments. We have seen the reenrollment rate into these programs down in the Single Digits as a percentage of the previous enrollees. The first phase has worked well, but the future at the moment is anyones guess. You have to think scenarios. We saw a significant government stimulus in the first part of this crisis. Checks even to americans. When the stimulus wears off, the first round, do you think we will see a rise in defaults . It is a possibility. We have seen a number of people come out of relief programs, then go back to paying credit cards in full. The question will be, how much of this is because it is from the stimulus programs, and how much of it is people going back to work again . I know all of them want to. Lookingoment, it is optimistic, but really, the Health Situation is going to drive what really happens and whether it is a w or how strong the v ends up being. Asia has been concerning. It has been sluggish in the return of the economy in many of the sectors, the consumer is being more cautious about spending, and even the Health Impact has not been as great even though the Health Impact has not been that great, the consumer is far from firing on all cylinders in asia. That is a point of concern for us. The consumer is becoming such a big part of what Economic Growth rates could look like moving forward. Can you hone in a little on what your biggest concerns are . Where are the areas where we may see the most pain points moving forward . From the consumer perspective, unfortunately, who got hit hardest. The youth, minorities, low income, many of the individuals who were able to work remotely and from home tended to be in the higherpaying roles. Was to thete hit more vulnerable parts of the population anyway, and the Health Crisis hit the elderly, whereas the Economic Impact hammered the youth and minorities. That is a point of real concern, to think about how we help them recover. The other question that comes up that we will have to, we will find out before too long, which is the different corporate sector which of the different corporate sectors will need to recover restructure because we dont need the capacity we have . What does that mean in terms of a round of corporate layoffs in the sectors being hit the hardest by this, or that may be hit by a longerterm macro slowdown . There are additional hope there are only two of them and the second is positive, but it could be several. Fraser speaking to bloomberg. The latest headlines, tencent appears to be a rare Company Emerging from the coronavirus upheaval in better shape than it started. Lockdowns triggered the surgeon game, which is being boosted by the release of a new title. The game debuted this month as the most downloaded title in china. Tencent rose again, extending their alltime highs and listing the stock further lifting the stock further from its march low. A whistleblower in germany warned about accounting irregularities and market manipulations. The finance ministry received papers from an anonymous source in late january 2019. The regulator apologized for its response, which has seen wirecard lose on most all its value amid concern that 2 billion cannot be found. Facebookss 5. 7 billion investment in geoplatforms that triggered widespread interest in the company and gives the social network just under 10 of the company. Has many users. Joined by our guest on china influencing everything from ipos to the real estate sector in hong kong. This is bloomberg. 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. Haidi a solid risk obsession in the u. S. Shery lets see how things are setting up in asia. We do have a few holidays in hong kong. Hong kong, taiwan and china markets are offline for dragon boat racing. Joining thet potential sellof