♪ ♪ ♪ ♪ >> europe continues gradual easing, as the number of people furloughed tops 40 million and global virus deaths at 250,000. goldman sachswith is next. on.p. paribas shares rise resiliency. we speak to the chief financial officer.

this is "bloomberg surveillance." i am francine lacqua at the bloomberg european headquarters in london. we are waiting to hear from the german court of legality, coming up shortly. meantime, this is what i'm looking at in markets. the markets are on tenterhooks on this ruling from the german government. i have to say, u.s. futures are climbing. sentiment being helped by expectations more economies will move toward easing of lockdowns. oil on the course for its longest winning streak in nine months. what else i am looking at, earnings. we had b.n.p. paribas rising, setting aside problem loans but warning full-year earnings will take a pounding from the pandemic. rallying after it reported a 35% plunge in first quarter profit. plenty more on that, and of

course we are waiting for that ruling on the legality of qe from the german court, but first let's get straight to bloomberg first word news, with viviana hurtado. viviana: we begin with an internal u.s. government projection showing the outbreak vastly accelerating by june to more than 200,000 cases and 2500 deaths per day. the white house called it an internal cdc document that doesn't match the coronavirus task force's own analysis. in the u.k., boris johnson facing criticism as he prepares to announce plans to reopen the economy. labor unions want legally binding risk assessments before staff return to their jobs, but members of the prime minister's own party urge him to ease the lockdown and get people back to work. total shares get a bump this morning, the company keeping its dividend unchanged after a 35%

plunge in profit. it could be worse in the months ahead, as the coronavirus crisis continues to destroy energy demand. despite all that, oil remains under pressure to go green, and to that end total is unveiling a plan to be carbon neutral by 2050. another threat of coronavirus emerging, blood clots, with doctors around the world noting disordersing-related manifesting themselves even days or months after respiratory symptoms ended. it is not unusual for infections to raise clotting risk, seen in viruses from the spanish flu to hiv and ebola. global news 24 hours a day, and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in 120 countries. francine: thank you so much. let's have a full roundup of the world economy.

goldman sachs says there is evidence the global economy is bottoming out. as governments ease back virus 16%rictions, they predict growth in the third quarter of 2020, after an average contraction of 32%. i'm pleased to be joined by the at goldmanxed income sachs. worry that things are getting better, but if there is a second wave the economy will be hit significantly? andrew: that's the key issue markets are focused on, the months,g for several up,looking to q3 picking but it is absolutely dependent on what happens with infection

rates and whether there is a so-called second wave. as we ease lockdowns, there remains the risk they would have to tighten controls. i do think that is the reason governments around the world will be relatively conscious about how they ease this lockdown. we think it's a process rather than an event, that it will happen in a staggered way, and it will be different across different regions. not like it is a standard way. many already seen countries adopting slightly different approaches. their way towards easing restrictions, we will watch infection rates very --sely in terms of how francine: when do you think we'll have a better idea of the

timeline of all this? ther the summer, an idea on medicine available, or earlier, especially the impact this could have on inflation or deflation? andrew: i think it will be a slow process, francine. we obviously are looking to china and some countries in asia had experience, as to what measures seem to be working more than not, so everyone will be sharing that information and trying to learn. countries, people are explaining this is a long process, so i think it is going to take a significant amount of time before we really have any clarity. international travel, for example, will be disruptive for many months.

that's going to be part of this that will move very slowly, but i'm not sure there will be a clear timeline around it, but we will be looking for countries aat wade into this first as signpost of how measures could be eased and how that enables the economy to get back on its feet again. the economic consequences of this terrible virus are very winificant, and governments tryingll -- governments will be trying to do a reading they can to get the economies back on their feet, but they will be cautious at the speed with which they were -- they relax restrictions. francine: what do you worry about the most? the depth of recession, or that the recovery would be patchy and that's almost more tricky?

sureyou need to make central banks have ammunition to help the recovery then, and inflation versus deflation. ofrew: i think the shape recovery and composition , which sectorsat look to be benefiting from this, and which remain under pressure. with respect to the question around inflation versus deflation, i think there is no doubt in their mind this is a very deflationary event, and w e're seeing significant decline in economic activity. million european workers furloughed, significant financial pressure along i a large number of households even

as restrictions are lifted. certainly, very much deflationary impact, and that's why central banks are comfortable with the amount of stimulus they are putting into the system. a few years down the track, we could see inflationary pressure. of vaccine that suddenly means we could all be immune, that would certainly be and everything, we are hearing suggests that is -- so we are certainly not concerned about inflationary pressures over the 12-18 months. francine: do you worry about -- if you look at fixed income,

when do markets worry about all the debt we are creating? or we can talk about debt splitting, things like that? isdrew: the level of debt astronomical. a few years ago, this would be shocking, but you have to bear in mind it is the cost of things. with negative rates across the euro zone, very low rates in the rest of the world, the cost is really the biggest thing here, and it looks like that will remain very low for a long period of time, but at some point it has to be paid back. -- have an hve

economic recovery that is sustainable, also associated with some sort of vaccine, markets will look at the debt k,crued from this and thin should there be an additional risk premium in bond markets, a steeper yield curve likely to see a feature in the years governments will be able to repay that debt,. , it feels like a little way off yet, and we still have to get to the trough of the economic decline before we have to be too concerned. francine: andrew, thank you so much. we we'll get back to andrew wilson of goldman sachs to talk more about fixed income and the impact of oil going negative. up next, an exclusive conversation with the e.u. trade

commissioner phil hogan, a 3:00 p.m. london timet. this is bloomberg. ♪

-- francine: this is "bloomberg surveillance." we expect the german decision on qe, legality of qe. we understand the german judges have partially dismissed the ecb qe case and have given a 7-1 ruling. i think something is being read out right now. one of the most important things was to see whether the german ruling whether the program that helped them exit the last crisis was illegal or not. the german court says some

actions in the case were unconstitutional. these tend to take a bit of time as they are reading us through the decision and conclusion they have given. this is what i know so far. the german judges have given a 7-1 ruling on the ecb qe case and ruled some action is unconstitutional. it is unclear what part of the qe is unconstitutional or whether it is an addendum. let's check to see if this is moving bonds. the italian 10-year yield, 1.76% and the german 10 year yield -0.5%. a lot of things are out there when it comes to market reaction. hoping to have a little more on this case. far, some of the action is unconstitutional. let's get straight to andrew wilson of goldman sachs asset management.

i know we are a little thin on details, and i will interrupt when we have more, but all i know at the moment, some action is unconstitutional. any idea of how the markets in a couple weeks will react to this? andrew: no. it's a little bit of a surprise. the markets were on edge this morning, but the expectation is it would be constitutional. so i will have to look into the details, they say some aspects the ruling is applying to the bundesbank so there could be some work around, that the actions of the europeank, but the central bank could continue to operate. we will have to look into details. we'd agree spreads shouldn't move much early on this until we get more detail around it. the concern remains around periphery, still relatively wide, although absolute yield

levels are manageable from a sustainability perspective. the details of this will be critical, so we will need to comb through those details to see what the implications are likely to be. the situation is very fluid. the court is saying some of the ecb actions were illegal and are germany, but it the same time it appears do not violate some constitutional german rules. the ecb decisions, i know having studied law that these are complicated and probably have subsections. the market is taking it is not so positive. the german ten-year bond extended a drop, yields rising .wo basis points to -.54%

as we await more clarity on the decision, could it change the way the ecb operates, or put pressure on european bonds? i know it is difficult because we don't have 100% clarity what the decision is yet, but right now what is worst case scenario and best case scenario? andrew: i think markets need to digest exactly what the details are, and if there is some work thend, some ability for ecb to continue to operate under the parameters they had previously outlined, as long as they are there to provide that support for the periphery rather than perhaps core markets. it's too early to speculate on the implications until we understand the details, but i'm at thegarde and the team ecb will be following this very

closely to look for a way to continue to provide the necessary support to the euro zone economies, which of course is critical in terms of keeping hese levels given the amount of issuance likely to come this year. francine: andrew, when you look far,at the ecb has done so do we need to see a lot more solidarity from the commission and the european central bank to make sure all the member states -- is there a danger italy will need a bailout at the end of this? andrew: they provide the support between monetary and fiscal, the monetary side of things that the ecb has a think reacted pretty well, after a slow start. is veryram significant, if you look at sovereign net issuance for the balance of the year.

certainly, a lot of support from that side. the fiscal side has been disappointing. you compare the european fiscal reaction to other major countries, far more significant. we continue to want to see more coordination between the monetary and fiscal authority. that is going to take time. as we know, in europe there are steps involved and it is not a straightforward, for obvious reasons. markets are still looking to do more fiscal support coming through to the economy, but the ecb and christine lagarde has in the actionsd they have taken, and we've seen that play out in markets with the yield levels we are experiencing, particularly across the periphery, certainly not being an impediment to debt

sustainability issues, so i think we remain confident the ecb will be there to do whatever it takes to ensure we don't get into a situation where deb sustainability -- debt sustainability issues are raised. francine: thank you so much. andrew wilson, from goldman sachs asset management joining us. and of course, we will try to bring you the latest from the german court. part of it saying they are not violating german law, but there might be part of the ruling that is illegal. we will get the nuances of the german court ruling. plenty more on that next. this is bloomberg. ♪

♪ that breakingave news that german judges in the ecb case, some actions are unconstitutional. are,ar what exactly those but reminding everyone this is a ruling about quantitative easing but not the new pandemic emergency purchase program. let's get back to andrew wilson, who has been trying to work out exactly what the ruling was saying. but let's go broader, and talk a little about what you do with fixed income overall. are their parts of the world you worry about? emerging markets, high yield? theew: as we think about sovereign bond markets, remaining at incredibly low yields for the foreseeable

period of time. what we see in the last three weeks, flows have gone back into markets, high-yield, investment-grade, emerging-market debt, expect to see those continue. to just how deep is this recession and to what extent we see stabilization of growth during the second quarter, markets are already looking to q3, q4 and that rebound in economic activity we've been talking about, and i think that provide some comfort that you will get compensated. francine: thank you so much, andrew wilson. ♪

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even your dvr recordings. download the xfinity stream app today to stream the entertainment you love. francine: this is "bloomberg surveillance." this is what we know about this constitutional court ruling. germany's top judges have read

but this actions by bag to participate in the $2.7 billion -- 2.7 euro -- 2.7 billion euro asset management purchase -- the german court, the highest german court giving the ecb three months to actually fix the qe. this is an ultimatum of three months. i imagine we will get a reaction from the ucb today -- the ecb today. judges say the ecb action was not act by the treaty. we did see market movement on the back of that decision. the ruling covers quantitative easing, so the qe program, but does not cover the emergency purchase program. we will move to euro and some of the german and italian bonds. let's get to first word news in new york city with viviana hurtado. viviana: that is where we are

going to begin. court,ecap germany's top the case against quantitative easing. it says some of the ecb actions are unconstitutional in germany, and therefore illegal. the court adding the central bank incisions are not act up by the e.u. treaty and the ruling does not apply to the asset purchase program. an internal u.s. government projection points to a surgeon virus cases, showing the out rake vastly accelerating by june 25ore than 200,000 cases and hundred deaths a day. the white house is calling it an internal cdc document. officials say it does not match with the coronavirus task force 's own analysis. people getting back to work might ease the pressure on economies across the continent, but it is far from business as usual. euro area economy is

expected to shrink 5%. "dead,"l quotas are according to the regulator. it comes as the biggest u.s. crude producing state is set to vote on the measures. likely marking the end of the oil production caps during the historic caps that other states are still discussing the potential measures. dr. coronavirus. another threat from the disease. global news 24 hours a day, on air and at quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries, i'm viviana hurtado. this is bloomberg. francine? thank you so much,

viviana. let's focus on recovery plans and what are the sectors and investment things we need to watch out for in the recovery but also in this crisis that we are living. health crisis turned into an economic crisis. we also want to talk about the german judge ruling in the week. some actions they say are unconstitutional, the german court giving three months for the ecb to try and fix this. my next guest is the chief in rothschildicer in switzerland. the group has a private bank and asset management, and joining us now is the chief investment officer. great to have you on the program. first of all, how worried are you about the german case? in certain ways this was unexpected, the fact that they ruled that some actions are unconstitutional. pressures put severe on european assets? gilles: good morning.

first of all, thank you very much. i would say the market is telling us that it is not really worried that we are looking at italian race or equity markets or the euro, and the ruling is -- i think we still need to learn some technical details about it, but my point on that is that the whole thing is not happening at the right time, given the pandemic and the market situation, and it shows also somehow the fragmentation of the e.u., because there is a lot at stake, and the consequences could be quite negative on markets. though for sure, we need to pay attention, but also we are looking forward to knowing more about the details of the ruling.

francine: is there a danger that actually this also hurts efforts in the future? about the pandemic recovery funds. is there a danger we could see the split between countries that need the relief and could potentially need a bailout after this, and germany and austria? and if there is a risk, what does it mean for europe? when you look at all the regions, is europe the one that is going to outperform the others this year? gilles: when you look at europe, the question is, what would attract foreign investors in european markets? is not a it fragmentation. this is what it is about. is joinedopean union up, probably there will be more interest from investors in these markets. i think that is really what it

is about. what it is showing us here is that we have an lot of differences and potential negatives as you mentioned. important, that may be in the longer term or from a broader perspective, what is happening right now. francine: what do you worry about the most about the crisis and the recovery, and is the market too optimistic about what kind of recovery we will see? gilles: well, i think it is all about timing. about exiting the lockdowns. it will take.ime it will be gradual. i think at the moment there is a lot of good news being priced in by markets, so the main risk for me is exiting lockdowns too quickly. of having a resurgence

rates. this is probably in the thing wem, the main can see in markets. thecine: where do you see best value out there? i don't know what you do with gold right now. what does it do for inflation 18 months from now? gilles: that is a point in terms of where we see value. the first thing we see in markets is there is a lot of value in quantity stocks, and that is quite a consensus. everybody wants to pick those companies with balance sheets that can be -- and have the ability to go through that crisis. said, there is value in gold over long term, especially the real yield negative, and there is a risk of

, statements that are positive factors for gold in the long term. in the short-term, however, we could see consolidation because .f the safe haven factor that could mean some short-term short-term consolidation for gold. but in the long-term we see value for gold. we also see value in active management, for example. we believe the current situation -- for being selective. being selective and credit. in equities, picking the winners with the right sectors and themes, the key to success. select active managers. these -- thesent

conditions. also, there are some secular things and investments that will be enforced. know, esg, for strongerwill be even in the future. about theore environment, about the governance as well. side, aboutthe i.t. big data, about cybersecurity, and so on, is a theme. aboutne: do you worry some of the sectors that you talked about just being overvalued? are they expensive, or is it worth paying a premium to be in the sectors that would be more or less safeguarded in the pandemic? gilles: in the short-term,

valuation is quite high. and a lot of good news has been priced in by markets, and definitely there is a risk here. but over the long-term, of course there is the question with low rates or lowered rates that could justify higher multiples over time. but definitely over the there ism, i think maybe a little too much good news priced in, and we should be a little bit cautious here. a good point here is to look at productivity. about 35%, 40%. that is still a very high number. rebound, it at the features very, very quick. and i think proportionate. so a little bit of cautiousness here.

thank you so much for joining us. -- gilles prince. we will go back to the german court ruling on ecb qe legality. this is bloomberg. ♪

francine: this is "bloomberg surveillance." let's get more on the german constitutional hearing for the ecb legality of qe. it has confused many minds, but the markets have settled then we seem to have a bit more of an answer of what they really mean. let's get to tony ahrens, who leads our legal coverage in europe. at first it was a little bit confusing. it happens a lot of times

because judges basically read out the premise of it and they go back in time, but is this a positive for the european central bank? can they go ahead with qe echo -- with qe? after a very exciting 15 minutes, i'm sure people's hearts were a bit higher in their chest. it all worked out, or at least the ruling has worked out to a certain extent. the judges expressed a lot of concerns about the program, but that after several minutes of listing those concerns and saying some part of them were constant -- were unconstitutional, then they got to the part where they said it is ok, if you show why you need these measures, why these measures are proportionate, it is ok. and you have three months to demonstrate why these measures are proportionate. francine: what are we saying,

that it violates german law, but there is a reason for doing that, or that it does not violate german law? tony: at the moment it violates german law. it should have been challenged government, there should have been challenges but -- about it. but it can meet german law if they show the proportionality of the measures to adjust the previous crisis. so once they do that, it will be in line with german law. it would have been simpler if the court had set it up that way and said this will be ok if you do this and this, but they didn't set it up that way. that is what the ruling is saying. francine: that is very exciting indeed. german judges have given the ecb three months to fix the qe program. will they be able to fix it in three months? aboutnobody is concerned

the ruling, but then again, i don't think anybody is concerned that it will be able to show this is disproportionate. one thing i should point out, this happened with the ocp ruling years ago. the court cleared its throat and show the misgivings it had with ever expanding ecb power and buyout programs. but at the end of the ruling, they gave a path to legality or a path to clearance that was taken, and that is exactly what has happened here again. the court expressed a lot of misgiving, but ultimately said it was ok with them. but we had to hear about the misgivings first. francine: great, thank you so much for joining us. tony aarons, who heads up our legal coverage in europe. coming up, a postponement or in some cases a cancellation of big events. we talk about dubai expo, challenges of that and what it means for the various participating countries and sponsors. that is coming up next. this is bloomberg.

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francine: this is "bloomberg surveillance." let's discuss the future of global events in the wake of the pandemic. one of the biggest things we are expecting this year has been postponed, that is dubai expo. it will not be held in october 2021 instead of october of this year. be joined byd to the secretary-general. thank you so much. to decide when these big conferences will come back and the loss of money, with the postponement of dubai, how much financially will this cost? ati think you have to look this in the scale of what is happening right now around the planet as the pandemic has created a huge economic fallout for many countries, and of course there is no way of hiding that dubai as well will have a certain follow-up from this as well.

i think we have to look at the saving grace of the situation that we are only six months away from opening this event, and that is important because it means the majority of the core structures of the expo have already been built. everything was on its way by july, august, being ready to be opened in october. i think all the countries that are participating in the expo have taken this into consideration. they have understood what it would mean even to their budgets, and i think this is one of the reasons why i am glad to see how many countries have come and voted quickly, positively to postpone the expo because it means they can actually absorb this and they see the benefit of making sure this event goes forward in 2021. mean for what does it the 2020 five expo? do you think that will be

delayed? can you talk about how the decision was taken? what people -- what were people worried about? is it social distancing, or were they just afraid that people would not show up. do not: no, for 2025i see any impact at all. you have the three year gap you have the closing dates from 2020 32025, good discussions with the japanese government. i don't see any real impact for them at all. as for what happened, why we had to make the decision, it has been something in the works for a few months. you have seen all the major events for 2020 for the calendar this year have been postponed or canceled, and as this epidemic grew into a pandemic, it became clear that it was not so much a question of social distancing, it is a question that airlines are close to shut -- airlines have chosen to shut down, and no matter how optimistic you can

look at it, i don't think we will see a return to normality by october of this year. an event like an expo is not something you can visit virtually. it is something that requires the presence of people. it is where they come to explore and enjoy the cultures from all over the world. so it was clear by march, april, that this was not going to be possible to have this event that we were expecting, and that everyone has been looking forward to. and the key thing you have to take away is the community -- yes? read abouthe more we covid-19, i know we are starting to try to figure out something but we have many more questions, it could be that october 2021, we are not 100% back to normal. how do you think the event will change? how will you get people to fly? will there be social measures in place? you have to start thinking about those things now. dimitri: on how things will look

in october 2021, it is true we do not really know what it is going to be like. we hear about how long a vaccine could take, we could hope from -- for some therapeutics. i know that the expo and the participating countries have started to take this into consideration, started to look at how do we redesigned the qe,rior, how do we do social distancing in place. and a lot of aspects are being looked at now and we still have a year and a half before it reopens. i think we have a lot of time not only to judge the situation as time progresses and as therapeutics or hopes on vaccines keep progressing, but it gives us the time we need to be able to put in place a safe expo for 2021. francine: do you think it could be smaller than the one we had in milan? dimitri: smaller in what terms? flight itself will not

become any smaller. participating countries have reaffirmed their commitment to not only stronger presentations, i think we have to take into consideration, how will the public perceive this event? for us at the moment, it looks like one of the big main gatherings of 2021 that we hope will be a post covid world. and that we will be able to come and enjoy it. i don't see it becoming smaller in any sense, and only time will tell how life slowly starts to come back to normal. francine: thank you so much for joining us. he is dimitri kerkentzes there. we will have plenty more, of course, on some of the things that we saw. we had the german court ruling that really kept us on our toes for 10 minutes as we try to figure out exactly what it was. it does seem to be giving a bit of a win to the european central

banks. top judges gave the european central bank two months to fix this 2.7 trillion euro asset purchase program. the markets are not too worried about it. initially they were, but the judges said that some parts of the quantitative easing program are not backed by the european union treaty. we are speaking with tony aarons, and what he was saying that this should be a fix -- maybe not an easy fix, but it certainly could have gotten worse. the ecb's controversial asset purchase program has been a concern for the german court since at least 2015 when the case was filed. we will have plenty more market movement. tom keene joins me out of new york. this is bloomberg. ♪ w?w?uhió'ñó

francine: germany gives the ecb a three-month ultimatum to fix qe. the judges say parts of the program are not backed by e.u. treaties. europe continues its gradual easing as the number of people furloughed tops 40 million. global virus deaths pass 250,000. and bnp paribas shares rise on resilient earnings, despite a $1.2 billion hit from the coronavirus hit. good morning, good afternoon, good evening, everyone. this is "bloomberg surveillance ." we had an eventful last hour as german following the court decision on the legality of the qe, the judges taking their time to figure out and explain to the world exactly what they were looking at. tos is a case that goes back 2015. waseems that in the end, it a little bit in favor of the european central bank. the judge is quite nuanced, saying the ecb, some rtof