On theinue to see a bid bond market. We are where we have been for a while now. Trading in a relatively high range. Earlier we got down to the bottom of that range. We are 60 to 75 in terms of the range we are seeing. What have we got coming up . We are going to carry on this conversation regarding the virus as well and what is happening in texas. We are going to be talking to associationscal covid19 task force had. Looking forward to that. I want to pick up on something you were talking about on how to europe is starting to outperform. Metcalfe, have we learned anything right now . Yields lower in the u. S. Bond markets. Europe by 1 . What does that tell you . Michael you might argue that markets have been blind to some of the data we have had. Equitieshe fact that have held in and done exceptionally well over the last few months in spite of what has been and will be the worst economic downturn we have seen, i think that is impressive. What we are learning is liquidity is sufficient. Stillpe of recovery is moving enough that equity markets are Still Holding in. Earnings will test that. Sentiment is still strong. That is a positive message. Bonds have been static. Lets talk about u. S. 10 year. Bonds have been static. Lets talk about u. S. 10year. The market has been completely blindsided by much stronger data than anticipated. Yields have not gone higher. Why . Michael it is an interesting question. The speculation of thought in the market that the next move from the fed will be yield curve control, and yet the market seems to be controlling the yield by itself. Is thereannot tell might be a strange signaling with that. I would be careful of reading too much into the fact that because yields have not gone up does not necessarily mean the market does not believe the data. I would be wary. Difficultsus is it is to figure out what the consensus actually is. There is a medium number for all these forecasts. Is a very number difficult concept today than it was six months ago. Alix fair point. We see a steepener in the u. S. And now they flatter perspective. At a higher look yield, is it off the table . Michael the other thing we have to remember is this is why equities we have had enormous levels of intervention in fixed income markets. You have to remove that is going to distort the economic signal. I would not be too concerned. It will be in interesting test in q3 if the data continues to recover. It is a much higher r in q3 than it was in q2. If the yields do not start going up then, we start getting concern. There are so much intervention in markets right now, im not too concerned that yields are not going up. I would be cautious of saying that does not mean the market does not believe the recovery. Guy does it take fed, ecb, bank of england intervention to get equity markets to go higher from here . They have hung around. They have done relatively well. You could argue they could have done better. The fed Balance Sheet has started to stall. Do we need another injection from the fed to get equities to move higher . If you dont believe that is coming in the near term, is it time to start thinking about this . Michael i think there is no doubt that q3 is going to be a lot harder. That is partly because i think it has just been liquidity, this idea that the wreckage of the Economic Data and the Earnings Data for q2 was going to be short, so expectations are higher. It was always going to be a higher bar. It is not just Monetary Policy stimulus that is fading. In the u. S. , there are sun setting fiscal boosts. You have unemployment payments especially. That means there is going to be a challenge. The recovery is going to need to be able to stand on its own two feet. Think there are reasons why q3 might be more of a challenge. I think it is interesting that monetary policies are entering q3 with considerable momentum from a low base. At some point, the recovery will stand on its own two feet. Whether it is in this quarter or not remains to be seen. Could provide the support. Alix i guess the question becomes where. In u. S. , it is large cap tech. Breadth has been deteriorating in the overall market. Is it the value trade . Hence more flows into europe . Michael the value trade has had a lot of thorns. It might well be surprising given that we are in a recession that it might be the consumer related sections you want to move towards. If this is datadriven rather than liquidity driven, that might be one of the areas where you get some support. Breously, you mentioned adth. There is clearly a huge spread in valuations right now. The market has been driven very narrowly and is tech centric. That sort of makes sense given the Economic Impact of the crisis on those sectors. Looking at a self starting recovery, you end up going back into more general cyclicals. Fear of big is the material underperforming right now . There is still a lot of money in money market funds. What is it going to take to get them off the sidelines . Michael i think we are all looking at that. Is ank that this important point to make. When you look at q2, when you look back to q2, how did the market rally so hard . Sayle put that together and that means the market is far ahead of the economy and therefore vulnerable. When you look at the amount of professionally managed money stored on the sidelines, that means the market cannot be overbought yet. In terms of what that money means, it is going to take time. It is going to take evidence in terms of what we talked about that the recovery is able to sustain itself without the continued add of new stimulus. It goes back to your question before. If the data can show the recovery is going to continue in q3 even though some of the quality spigots are getting turned down, that money is going to get put to work. Data in look at the terms of the way the virus is progressing, it seems europe has a better chance of getting that self starting recovery earlier than the u. S. Money might get put to work in europe sooner than the u. S. Guy michael, have a great weekend. Thank you for joining us. Michael metcalfe, global head of macro strategy joining us from state street global markets. We will talk more about the virus. Particularly what is happening in the sun belt. Hospitalizations rising. We are likely to see deaths rising at some point. Get a take on the sequencing of cases, hospitalizations, mortality. That is coming up. This is bloomberg. Guy london, im guy johnson. Alix steel in new york. This is the european close on bloomberg markets. New daily hospitalizations in surpassing 435. Our guest part of the covid19 task force. Thank you for your time. We have seen cases picking up. We had seen hospital we have seen hospitalizations picking up. Is it inevitable we will see mortalities picking up . Thank you for having me. Cases, hospitalizations, unfortunately deaths. Seeing an uptick in deaths. Treatw more about how to covid19 than we did in march and april, and people are potentially younger. Alix can you help us understand and paint the picture of what is happening in texas . What is it like on the ground . Why were we surprised that cases would lead to deaths. We saw that happen in new york. Why wasnt inventory built . That is a good question. One of the things that happened is that we as a country decided it did not affect them. This was a new york, new jersey issue. When we started to open, we started to build up reservoirs of infection, city by city, county by county, reaping some of that movement we sowed earlier. You are at a point where you understand houston and dallas where the medical centers are concerned about staffing. Bodyan only task the human with so much, so people have their own burnout. We are worried about what is going on. We are asking people as much as possible. Wear your mass, wash your hands, watch your physical distance. Try to isolate. Guy how has the demographics changed . There is this argument that circulates in the Financial Markets that younger people are now getting it. They are less likely to need hospitalization. If they need hospitalization, they are less likely to die. As a result, this is becoming a manageable process. Is that a fair reflection of what you are seeing . I hear that argument. I will say this. If we look at the people that are getting infected, they seem to skew longer. Those people dont necessarily live alone. They have parents and grandparents they live with. When we look at deaths, they are still in the 60 to 80 predominately. You are hearing cases of younger people passing away with or without comorbidities. It is a selfish narrative to say just because young people are getting it, we dont have to worry about anymore. We are hopeful that the can prolonge have lives. We are not putting people on a ventilator immediately. If you only have 10 beds and 20 people need it, you are going to have an increased of mortality. If you double the number of people coming into the hospital even if you cut it in half, you are still where you started from. If you are outdoors, the feeling is you will be ok. Texas is experiencing now that it is hot, so you are indoors. Im wondering if this is a template for how the east has to think about the virus when it gets cold. We have we have seen the conversation about whether haet effects it. This is not a surge, this is a campfire that is out of control that we never put out. People have to really start to understand the risks. That is something the Texas Medical Association has done to done deliberately to help people understand. What do you think about sending kids back to school . I laugh not because it is funny. This is a serious issue. I have a 14yearold and 10yearold that are desperate to go back to school. If we look at the largest data set we have from china, the ,ates seem to be really low less than 5 in terms of transmission. I understand that as an at the genealogist. Anhink it is important as epidemiologist. I think it is important that we talk about these numbers in abstract. Do you want to put your family in that number . That is not a statistic. Going back to school is going to be a crucial part of our journey to getting our economy back. We have to go back to school safely. There have to be safeguards, whether it is staggered classes, certain pods. Throwing all these kids back into school and just rolling the dice, i dont think that is an acceptable answer. We need to have a serious conversation. Alix you are talking to two parents. We totally understand. My husband and i were talking yesterday about what our threshold is for sending our daughter back to school. We just dont know. Thank you. Good to catch up. Iffs, wep, tech and tar talk about the battle between france and tech giants like amazon, facebook, google. This is bloomberg. It is time for the Bloomberg Business flash. American airlines reportedly had threatened to cancel some of its boeing 737 max orders. The airline has struggled to find financing for 17 of the planes it expects boeing to deliver this year. Max has been grounded for more than a year after two fatal crashes. For the first time ever, investors have that 20 billion bet 20 billion against a stock. Shorted close to that mark. Raised its amazon price target to the highest on wall street. It said it expects u. S. Ecommerce sales to rise 43 by 2022 and expects amazon to continue to dominate in the pandemic surge for online sales. Alix thank you so much. Something else im watching as we deal with markets, as we deal with copper over 6,400, the highest price since may 2016. Part of that is going to be a supply issue. You have unions in chile, the Worlds Largest producer, creating problems getting back to work in the midst of the pandemic. There has to be some underlying demand for this rally to have some validity. Guy absolutely. There probably is a valid point to make. You are getting the difference between what is happening in the crude market. We picked up, trading north of 40 today on wit. Wti. The Industrial Metals have had a stronger run then we have seen in the Energy Sector. There has been no tightness in supply in the oil market, but. Here has been some you are getting that bigger price rally coming through the copper. Gold is worth looking at. Is cratering at the moment. Look completely different in terms of the energy story. Alix it is true. I think gold could be a china story. As china opens up, they are going to buy physical gold. This is something to keep in mind. Guy absolutely. India is a huge buyer of gold. I wonder whether or not that retail bid will ultimately be there. European markets quite rosy going into the end of the week. We are still generally down on the week. This is bloomberg. Is bloomberg. Guy 30 seconds until the end of equity trading in europe. It turned out to be a much more positive afternoon than morning. We did see a negative story out of china. Asope has gained traction the opening has progressed. I will reiterate that once again we are seeing light volume and that has been a theme throughout the week. We are entering the summer months. Will that be a factor . Will that raise the risks for a volatility event . Stoxx 600 up. 8 . I want to talk about what is happening. We have seen the dax outperforming. The dax is the only main market to be in positive territory. The ftse is down 1 . The cac 40 down. 8 . The dax is being driven by two stocks. Infineon and s. A. P. Has done well. We will talk about basf a little bit later on. It has done relatively well despite what we are seeing in infineon hasr and exposure to that car sector. Let me show you what has been performing in europe. A fairly eclectic week in terms of the sector story. Today every sector of our health care is in positive territory. A big week next week. United states Car Companies are coming back. We are seeing the cyclicals coming back, we also have defensives doing well. Food and beverage doing well. No clear risk on risk off narrative. I mentioned what is happening with basf, out with numbers early on, actually looks better than the market was anticipating. A tough set of numbers but they have done relatively well relative to what the market was expecting and as a result of flat session today. Quite a negative number from Credit Suisse on Inventory Management puma down. The market sense is it could have been worse. Expectations are quite bleak going into this earnings report. Eason any kind of not as bad as expected, you wonder if it could be rewarded. Rough. Rg russia is that will feedback into demand. At the moment, it looks ok. European markets closing on a more positive note. The dax doing relatively well. One of the factors we are going to have to be talking about over the next few days is what is happening when it comes to the , the storytory coming out of france, and we have a call today between the french and United States on this issue. Ambassadors will be talking, and you wonder what will come out of it. Lets get a sense of where we are going with it. Eileen burbage joining us to discuss. I look at the message out of the United States and france in europe and im wondering where the compromise comes from. Where you see it, if at all . See a it is hard to compromise. Between now and november, it will be hard for the u. S. To back down or seen as compromising. What we have seen so far is a titfortat and tap dancing around it. Announcedtime france they might introduce digital tax cuts, the u. S. Announced they would impose tariffs on all french products, including french wine. They did back down and say we will hold off as long as france can hold off. You might see everyone taking a step forward and step back, i have stepped forward and a half step back. I would say at least through november. Alix the question i have is how material are these numbers . The numbers floating around today are 300 million to 400 million. What are we talking about in the flipside, the digital tax. How material is it . Eileen what we are looking at is any percentage of sales from Companies OfferingSearch Engines or social media website and Online Marketing spaces that will affect all of the big multinational american Tech Companies, and that is going to be a pretty impactful change for them. Think the amount of money that will make a difference for the u. K. Treasury, the u. S. Thinks this is unfairly targeted at u. S. Companies, therefore any amount of money taken from these companies, they are the ones dominating the respective market , are seen as defensive or overaggressive. Guy how do we resolve this in a longterm . Will play as greater role in the United States and europe and north america you think we are going to see a solution that is amicable or do you think this becomes another front and a growing trade war . Eileen it could be a bit of both. I think this will become another Sticking Point in what we are seeing around the world with trait discussions and global trade wars which sort of kicked off with the u. S. And china. I think this will become another thorn in the u. S. Side. I think theres a couple of ways this could be mitigated or we could get to smoother pastors. One is the oecd comes out with its recommendation and is seen more of a neutral or unifying body as opposed to individual countries like the u. K. And france and italy and spain, which is what the u. S. Is reacting to. Bysees it as being attacked all of the countries wanted a time as opposed to the oecd taking a more measured approach from their point of view. If the oecd or come out with their message sooner rather than later, that would help. Youre seeing individual countries act sooner. Another thing is once the u. S. Election is passed us, no matter what the outcome is, you will see a new administration with a four year term as opposed of having to think about an immediate election and it will have a more longterm view and not worry about voters, necessarily. Alix u. S. Politicians are always varied about voters. Are always worried about voters. That is the problem. I feel like no matter who wins the white house, taxing big tech is popular on both parties sides. Who do you think is the bigger threat to the Big Tech Companies . Is it from the u. S. Or is it from potential taxes from europe . Eileen that is a great point. I think the biggest threat is one of the u. S. Government could be doing to Tech Companies. Looking into competitive measures, looking into breaking up some of the companies, that is a much greater threat to these