French group bucks the trerchd by confirming its dividend bnp says revenue is resilient. Saying the Economic Outlook is difficult. We should look at a return to normaliz normaliz normalized aspects is probably not going to happen this year. The return like in 2019 will not be reached before 2022 new car sales are almost completely wiped out in april, falling 97 . Levels not seen since 1946 as the coronavirus pandemic wipes out consumer demand. A clash of titans wework founder adam neumann takes the fight to softbank for scrapping the 3 billion tender offer that was paurt of a rescue plan for the Office Sharing group a warm welcome to street signs this morning. We are awaiting germanys Constitutional Court ruling on whether they overstepped the mandate purchasing bonds even if the courtrooms in favor of the central bank, the decision could have a Lasting Impact on measures including the pandemic emergency package lets get a check in the leadup to the decision. We have seen yields move higher. Across the stage, every one of those 10year was higher the german higher negative, thats the level to be aware of. Italian 10year at 1. 77 joining us this morning, lets bring in Senior Research fellow for comparative public law and International Law and geoff is with us for what could be eam a monumental decision. Thank you for being with us. Given the court of justice has given his opinion in favor of the Bond Purchase Program, it seems the hurdles are pretty high for the german court to rule against it today. Definitely. If i would take a guess, i would not expect they would construe any hurdle in substance, they will accept the ruling it is all about fine tuning. The procedure requirements the bank needs to fulfill. The main economic function will not be fulfill Police Department by the Court Foreign investors who have been paying more attention to the recent pepp, which is their pandemic emergency purchase program. A separate program what is the implications around restrictions with regard to the pspp the actual Public Sector that is in question today . It will be unclear what the effect will be on pepp because pepp is not the same as quantitative easing that is on trial today. Pepp is sort of a high brid of the quantitative easing and from 2012 and the old program that consisted in buying bonds specifically in compromised or problematic debt there would be fundamentally unclear. Nevertheless given that it is not the same, i dont think that it would have to stop its pepp that is highly unlikely. They might have to implement some changes thank you for your Thoughts Police stay with us. I want to bring in our next guest, gunnar beck, also one of the plaintiffs in the case today. Thank you for being with us, sir. I want to call one of your recent tweets. You tweeted that the german court may have barked but it will not bite. Germans are in the work capity u lags that is not the case before the german Constitutional Court. There has been cases since 1993 starting with the mastery litigation in each of these cases, weve had been six or seven so far, the court has expressed dissatisfaction with government or eu policy or indeed with the provisions of the new eu treaty. In each of those cases, it was to satisfy, it drew a few red lines effectively saying that, okay, on this occasion, we accept the new programs but in future, you mustnt do Something Else these red lines were lines in the sand because they almost immediately broken and then we drew we seem to have slipped into some kind of voicemail system. Lets go back to mataes. Probably that theyll loose their argument today but there is underlying this the principal that perhaps the ecb needs to have more clear limits on its activities around adventurous qe is that something that could potentially emerge, do you think, once we have come past this ruling . I think weve seen that emerging already ever since there were illegal attacks on the program in 2012. The ecb has become a lot more careful on how it drafts its programs and makes them comparable to the treaties and shows them all of these restrictions are already in place if we look back on what the court has decided in the past, then clipping wings mostly meant ob lying the ecb to give reasons, to check its programs regularly, the necessity of them to ensure it wont be too much of a financial burden of parliaments as opposed to central bank it is more in the remote areas of that program that they will demand modifications i dont think you see that you need to give the central bank discretion absolutely. Part of the dispute seems to be about the signaling front to the market and the resistance to things like Forward Guidance around the Bond Purchasing Program and the duration that those could be held for. Could there be some reigning in that to produce some lack of clarity. It seems Central Banks all around the world have decided in this crisis environment, it is very important for the purpose of liquidity and proper functioning of these debt markets that all participants understand the support that the Central Banks are providing. This seems to run contrary to what those arguing this decision would like to see. It relates to that whole issue of whether there is moral hazard for these markets . Exactly there is a conflict of interest. On one hand, the markets look at clarity and guidance and that requires a certain amount of the program. That kind of reliability is debtmental to the obligation to the ecb not to finance government the more the government can rely on a program, the less legal it is or the less koeshe if you want. It is really a balancing and the question is how to strike that ambulance and how that will somehow be struck. I dont think they will put the entire program, call the entire program into question. The question is, do we see a slight shifting of reliability here or Forward Guidance do they put some limits on the Forward Guidance that the ecb may give thank you as you can see there, we are seeing some action out of germany. We are expecting the ruling now to come through. This is all happening live we will be listening in and bringing you the latest. This is of course theyll be giving the final ruling today. The original case filed in 2015. Now, even if they do rule in favor of the ecb, the question is will this change direction for the ecb and will we see a new case perhaps raised against the pspp, the separate program for the pandemic Emergency Response purchases one thing to bear in mind is that one of the analysts flagged is that these judges dont operate in the political vacuum. Given this verdict is coming at a time they are facing the coronavirus and pressures, that no doubt will play into the decision making. Lets be very frank about this, the ecb had two clear mandates one was stability of the euro as a currency and the other was the inflation target it didnt have a growth mandate or a mandate to bail out governments that had run very highdef sits and didnt have a mandate to deal with a pandemic. But the ecb has been creative under mario draghi and Christine Lagarde here, it has not explicitly supported the deficits in countries like italy and elsewhere. Implicitly, its very clear by lowering the refunding cost, it has done that. Through the sovereign purchase programs, it has also allowed these countries to refund at much lower rates the question Going Forward, it seems to me, todays decision is very important but the bigger question, it seems to me, is which direction are we now heading . Is it further integration . Is it ultimately a sharing of burden and some form of treasury function, a euro bond or are we moving further away from that and will todays decision be seen as Something Like a pivot point that takes us away from integration and less burden sharing and ultimately governments have to go it a low and bare the responsibilities of their own actions . You made the distinction around the shortterm impact of the ecbs unconventional measures starting with Mario Draghis infamous speech to madam lagarde with the pandemic purchase program, we have seen bond yields react we dont know what the world would have looked like had they not initiated these measures clearly, there has been a shortterm impact. Long term, we dont have a exit strategy in terms of todays decision, one thing to bear in mind the german court is facing the fact that European Court of justice has already given the opinion on this matter. They have ruled in favor of the ecb. If the german court were to rule against it, it would mark an unprecedented clash between german and eu law andres a key hurdle that the german court is facing today the fact that the ecg has already given its opinion. You can see on the screen there, let me voice this, germanys courtrooms partially against the ecb bond purchases if you look at the key measure of how the market is reacting to this, that is the btp bund spread, initially, we saw a little tightening on that spread we are seeing some headline selling on the 10year btp that should widen to a degree, the spread between what is perceived as the solid sovereign of germany and the slightly riskier 10year italian btp. If you are still with us, let me bring you back into this conversation you are taking this realtime as we are we are getting some movement in the sovereign bund spread. Your comment welcome what do you think of what you are hearing so far what i hear so far is that on substance, they are negative about the program but rejected ultimately the complaint which means, they are accepting or deciding not to intervene maybe for legal reasons because they think the European Court of justice, which accepted the program back in 2018, did not exceed the constitutional limits nevertheless, on substance, they remain convinced that the European Court of justice is violating the eu treaty. It is a bit of a compromise among the judges on substance they are right but they are not going to do anything well be back to business as usual, the program will continue but the judges think in theory, they were right. It is a question of what you can buy for that probably not much. It might be a safe facing compromise for a court that got itself into a very, very tricky problem problematic decision thank you for your thoughts lets bring back gunnar, one of the playofintiffs in this case what are your thoughts on the comments good morning to you again you may call it a compromise i think it could also be illustrated by the phrase you mentioned to me earlier, namely, that the court is barking, it never bites. I think the previous commenter put it correctly when he said, clearly, the court thinks that the ecb is acting unlawfully it said so in 2017 in its first decision on the matter when it also decided to refer the case to the European Court of justice. In 2017, the court was quite clear that ecb was engaging in monetary state financing which is prohibited and also engaged in policy making on a large scale. Something that the treaty reserves for member state. It is essentially reiterating these, the Court Reasons well but it lacks the courage to act on its own running gunnar, can i ask you, obviously this is not a ruling on the pandemic program. Are you interested in pursuing this issue with regard to that specific program i should just make one correction i think the lady who asked me the first question said i was one of the plaintiffs in this case this is not correct. I was involved as a lawyer initially until about 2017 not since ive taken up a political appointment. To your second essentially a central bank, bankrolled european economy. In particular, insofar as bonds are no longer bought according to the capital key there is a clear concentration on the italian and southern european bonds we have to review the situation. It is a tall order as far as the court is always reluctant to do anything it doesnt like what it is seeing but it isnt prepared to challenge the European Court of justice or the government. Thank you, sir. Thank you for the clarification. Im sorry about the miss communication there on my part one last one for me, in terms of the moral hazard argument in play here. This is the key that purchases could stifle the will of the countries to pursue fiscal policies this is a big issue in regard to how much she wants to do on eamon tarry policy side. How much does that factor into the ecb moving forward that the more they do, the less fiscal policies need to do . I dont think they are concerned with that at all certainly mario draghi wasnt. I think i have a degree of sympathy for mrs. Lagarde because draghi left her with a situation where she had effectively no choice but to move further into unlawful territory. Now is the ecb concerned about moral hazard that is estimate and weve already seen the consequences. The ecb isnt concerned about it they have taken a decision long ago under mario draghi in 2012 that it will support the euro no matter what the cost and that it will essentially support the unsustainable borrowing levels of italy and other countries this is the new phase of history in money printing. In the whole of economic history, there isnt a single instance where massive money printing came a good end and it wont in the eurozone either i thank you i want to thank both of our panelists this morning Senior Research fellow for comparative public law and International Law, jr. Professor at financial law and gunnar beck mep and geoff as well this morning. Lets check the markets for the reaction to this we are seeing a broadbased rebound throughout the morning you can see holding on to gains for the most part, we have the german Index Trading about 2 higher and the ftse mib as well. Taking this decision in stride, we have seen the market cut gains a little by offering some negative territory around the ecb and effectively that would be the ruling saying it partially violates and a bit of a compromise coming through. Well take a quick break, coming up, drtrading troubles weigh on bnp. We hear from the cfo after the break. Need help like never before and wells fargo employees are finding ways to do our part. By helping people stay in their homes, through mortgage Payment Relief efforts. Helping local businesses in their vital role in the american economy. And helping hundreds of local organizations provide food and other critical needs. When you need us, wells fargo is here to help. There are times when our need to connect really matters. To keep customers and employees in the know. To keep business moving. Comcast business is prepared for times like these. Powered by the nations largest gigspeed network. To help give you the speed, reliability, and security you need. Tools to manage your business from any device, anywhere. And a team of experts here for you 24 7. Weve always believed in the power of working together. Thats why, when every connection counts. You can count on us. Welcome back First Quarter total expects to slash investments for 2020 by 4 billion and cut operating costs by 1 billion. Total said it would issue a 66 cent dividend per share. Trading higher on the back of that news. Up 6. 9 . We are seeing a strong bid for oil and gas this morning repsol has seen a sink warned it is difficult to predict the full impact of the coronavirus. Net debt rose to 4. 48 million euros. In the banking space, bnp paribas sank after the french lender was weighed down and set aside further provisions lets get to these numbers these seem to be taken better than socgen numbers that came through last week. Thats right. There were can earns from last week about what is meant for the other french banks and what could be expected as other french banks that could be reporting this week. A good surprise. Results better than expected with a net profit of 1. 38 billion the forecast was down between 50 and 60 . You have a good set of results for bnp paribas. They put about half a billion euros for Loan Loss Provisions here looking ahead because of the impact of covid. They mention the ratio is still up 12 warning that the net profit for the bank in 2020 could be down between 15 to 20 for the bank with the cfo asking about the reaction and the commitment to the access to liquidity and whether in his view the bank was doing too much or not enough if you look at the banks today, banks are really the instrument to support the return of the economy it is important. It is important that banks can do this and do this in a right way. A look at the supervisors on one handcrystallize and before taking that out. On top of that, they are sure that Monetary Policy can find its way through the banks. If you add it all up, it is something the authorities are really doing so that the banks have played their roll in getting out of this covid19 crisis there are questions on what kind of recovery they are going to get and maybe the damage done to the fabric to some countries including france could be really deep and difficult to recover. Whats your view on that the recovery will be gradual and a look to the return of normalized aspects is probably not going to happen before the end of this year then the economy will have to build up again in our view, the return to the gdp like 2019 will not be reached before 2022. That is the dynamic that we anticipate last mentioned a warning about the slow pace of recovery. Better set of result sending their shares higher more than 5 this morning on the French Market thank you for breaking it down for us. I want to take it back to the uk some fresh data. The april pmi data the final services came in at 13. 4, slightly stronger than the flash estimate of 13. 3 that was the lowest since this survey began in terms of the composite pmi came in at 13. 8 ve