from bloomberg's middle east headquarters in dubai. i'm manus cranny. it is daybreak europe. climb amid signs the coronavirus is stabilizing in europe. boris johnson uses the u.k. lockdown. president trump combats an outbreak in the white house and relaxaland to further

coronavirus restrictions. the pboc pledges stronger monetary policy. saudi arabia confronts its own predicament with slashing of spending and tripling vat's. the european commission threatens to sue germany. --sident ursula von warm welcome to the show. the agenda has been set. more stimulus from china and japan. negative interest rate policy is exploding across the u.s.. to the market, april fed funds futures for 2021 skirmishing with a negative. according to jpmorgan, you should. there is a big bet negative rates could go to -45 bips in 2021. the dollar, what are the consequences of nirp. therest-rate policy on

dollar would be the dollar living on borrowed time according to standard chartered. dissipating.ial is we are rolling over. dollar-yen, more news of more stimulus from china and from abe japan could do more helicopter money if needed. the dollar rises, the yen falls. have a look at the rest of markets. what is the biggest risk of the morning? asian stocks rise on the stimulus discussion, sms -- s&p futures up. but the nasdaq takes it all. let's kick off the discussion on the coronavirus response from around the world. the global number of cases have surpassed 4 million with the situation improving in many european countries. france and italy reporting the lowest fatality since march, the u.k. has outlined plans to ease the lockdown with a new tagline.

,nnmarie hordern is in new york contracting the rhetoric globally. to see new details on new york, the state beginning to reopen. the differential, quite precise. annmarie: that's exactly right. it is a tale of almost two cities. we will get more details today from governor andrew cuomo about parts of the state reopening soon as the end of the lockdown which officially ends may 15, but there is no indication yet what this means for new york city and the surrounding areas. no indication of when we could see new york city back up and running, but there were clear signs of the flattening of the infection curve, other showing the virus outbreak is nearing where it was at the start of the outbreak in march in new york city of what the governor rightly calls a

hellish journey. a still sunday reported devastating death toll number, but one of the lowest numbers we have seen with 207 fatalities so today, we are waiting for details. likely, manufacturing sector, construction all opening but as you rightfully point out, this will likely be just upstate in areas that have not been as hard-hit as new york city and the tri-state area. and it is how you get everybody back to work. in new york in a mass transit system. of course, the u.s. news flow goes back to washington and to the inner circle. vice president mike pence has been self-isolating. very tricky is a situation and we see this impacting senior personnel of the white house.

this weekend, vice president mike pence did not attend meetings at the white house. he stayed away from the white house. one of his spokesman did say he would be back at the white house but this comes as his spokeswoman, one of his aides was diagnosed with the virus. it is a tricky situation because she's also married to stephen miller, the top advisor to donald trump. move, the potential for the coronavirus to impact more senior members of the administration. on top of that, katie miller is also the spokesperson for the coronavirus task force so positing -- following this her,ive test result from we saw three health officials also take on isolation moves, including dr. anthony fauci, one of the main faces of the pandemic leading the government response -- leading the government response. moderate quarantine given the news and it shows this is going to be a precarious

situation for the administration. they are trying to convince americans it is safe to go back to work, safe to resume life we knew it before the pandemic that at the same time, we see the coronavirus moving ever more closely through the west wing and the inner circle of the administration. this virus knows no , princees, from royalty charles, to the leader of the united kingdom boris johnson. he's got a new message. johnson, stay-at-home, stay alert. there is some dissatisfaction and discordance with the lack of progress and the lack of clarity in the messaging. annmarie: that is what you heard immediately from the opposition, saying there just wasn't enough clarity in this address boris johnson gave yesterday evening in the united kingdom. there hopefully will be more details today. there is going to be a published

plan, a 50-page document of the first careful steps. what we heard from him yesterday was starting with a reopening, including unlimited outdoor activity like golfing and tennis, beaches and parks, he told people who cannot work from home, such as manufacturing and consumption sectors to return to work. if you can work from home, stay put, stay alert. for school, just in england, primary schools, potentially some children could go back to their desks by june, but for highschooler's, it will likely not be until september. businesses will be giving guidance on how to keep themselves kobe to secure -- covid secure. pressureoming amid from the opposition on what the clarity is, but for the u.k. government and governments around the world, there is a command from some to get people back to work, to get the economy back and running. at the same time, there are the

health official saying we need to be very careful to make sure we don't have a second wave. kit is a tricky line for a lot of people, manus. manus: it is, indeed, a delicate line. annmarie hordern, stay safe in new york. tracking the virus globally and rhetoric from leaders. the european commission is threatening to sue germany over the country's constitutional court, challenging the european central bank's monetary policy. the commission president says the final word on the eu law is always spoken at the european court of justice, citing eu law over national law. response, the central bank saying their unprecedented challenge from the pandemic and it is quarterly policy report and avoids excess liquidity, flooding the economy.

instead, it will maintain liquidity at a reasonable level. saudi arabia has announced austerity measures, tripling value added tax, alliances for government workers according to state media. are being taken as the coronavirus pandemic continues to hit global oil demand after a historic route impresses. global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. coming up on the show, the worst is yet to come. minneapolis fed president neel kashkari says the unemployment rate is really around 24%. congress needs to step up. this is bloomberg. ♪

that is the numbers are, and they are very bad and historic, they understate how bad the situation is. >> this jobs report today is full of heartbreak, hardship. >> some of this looks to be temporary layoffs, three quarters of it, but that doesn't necessarily make it any better. >> if you look at who is getting hit the hardest, it is the people who can least afford it. >> he saw a disproportionate hit among hispanics, blacks, the reduction and losses in participation among minorities was particularly large. >> it is no guarantee that these are temporary layoffs. the job before us is to make them so. those were some of the

lawmakers, the economists, the voices that join us on bloomberg on a staggering jobless number and unemployment rate in the united states, 14.7% in april. andhighest since the 1930's this is expected to worsen in may as job cuts spread further into white-collar areas. unemployment could peek north of 20% in may or june before the economy even starts to really come back in the second half of the year. that is according to the white house advisor kevin hasn't on cbs. let's get to my guest host this morning, joining me. before we do that, there is a warning of more pain to come from the minneapolis fed president neel kashkari. news, adding the real rate of unemployment is around 23%, 24%. he said congress should provide more help to the american public

and they are going to need it. catherine doyle is the investment specialist at new to investment -- newton investment. i read those stats and it is hard to get your head around 20 million people not having a job. out and sayscomes this is going to recover quickly, but i put it to you that the number of companies filing for bankruptcy, neiman marcus, the list goes on and those are the banner heads versus the small to medium enterprises. there is no way we are going back from 20 million to 10 million or 10% in any quickstep in a realistic way? good morning. >> good morning. it certainly is very challenging. says thereyment data working that a collection into the surveys so the unemployment -- data collection into

survey so unemployment could be understated. with qualityblems of data and that permeates areas for what it is going to do is bifurcation a between winners and losers so you will have the obvious victims, which will be the airlines and the leisure , any industry where a physical presence is important to thrive, and daniel have the winners which is increasingly -- and then you'll have the winners, which it is increasingly clear that tech companies are coming out as winners in the they have managed to expand their customer base, so covid-19 is proving a fronts, and the biggest damage will be for the

smaller unquoted companies that are very important to the health of the economy. the ripple effects of some of those going to the wall will be felt for some time. manus: the debate is this. what is the new normal? i looked toward the lead story on bloomberg which is china's disney theme park reopening, tickets sold out. gone. does that change the narrative for you in any way, as a torchlight of maybe what repressed demand is globally when we move to an unsynchronized reopening around the world? i emphasize the word "unsynchronized." what does the disney story say to you, first of all? catherine: it shows economies are moving at a different speed, which is something we have known for some time, and particularly in the case of china, i think the interest here is you are

of thethis souring u.s.-china relationship and this wording of rivals rather than partners and you will see increasing competitiveness and perhaps a sense of some companies having an unfair advantage perhaps because they come out of this earlier, and in the case of china, there are all sorts of other underlying narratives under the surface, so are going tories have to see how this all pans out. the relaxation of the lockdown is going to be very much dependent on how the economy goes and perhaps that won't play out in identical fashion across countries but it could be the

psychology is different in some of these countries. manus: let's extrapolate the psychology of confidence. i take you to mirp, negative interest rate policy. the market tested this trip last week and will continue to put pressure on the negative interest rate narrative in the united states of america. a, do you think it is likely in wouldmaybe before and b, it be destructive to consumer confidence in the united states relative to the destruction to the saver and retiree that has been battered in europe? what i couldll, see happening more rather than the negative interest rate

scenario, perhaps the use of the fiscal lever. you've already seen such huge action on both the monetary and but certainlye, the use of measures like helicopter money could be a more direct way of addressing these problems. of course, you've already seen that, but that comes with other risks, one of which is inflation. in answer to your question about savers, clearly they will be suffering from at the very least very low interest rates. already, they are not burning much on their savings, but it g much on their savings but it does precipitate the crisis you will see in the

aging population that has become dependent on income from their savings. -- you say, said, maybe the moralistic answer is helicopter money. we will talk about how that plays out to investment. catherine doyle, newton investment management stays with the team. it is monday morning, 6:20 in london, 7:20 in paris. emirates group is looking for financing after 28% in -- drop in the full-year profit. they raised $1.2 billion in the first quarter to provide a cushion from the impact of the coronavirus. elon musk is lashing out at the county blocking tesla from opening its u.s. car plant. he's threatening to relocate operations to other states, sees operation of the manufacturing

and he's filed a complaint with the district court in san francisco. after last week's rally, bitcoin has slumped below $10,000. analysts thought it would be good for prices and it happens every four years and slows down the rate of new tokens being created. the feature dinner -- designed in controlled inflation. that is here bloomberg business flash. coming up, european commission hits back. challenges to constitutional court. this is bloomberg. ♪

manus: daybreak: europe come on in manus cranny from dubai. the european commission has threatened to sue germany twice in one weekend. abiding eu law following a ruling by the constitutional court challenging the ecb's monetary authority. the commission president ursula von der leyen said this. the final word of the eu law is always spoken in luxembourg. nowhere else. -- european mission commission's task is to safeguard a proper functioning

of the year of the euro system and unions legal system. we will look into the possibilities of next steps which may include the option of infringement proceedings. 's from newtone investment management and is still with us. eu to germany, germany to the south of europe, but i emphasize south of europe. breakup risk is on the table. how do you play that? is it real, or is it media hype? catherine: i don't think it is -- it is certainly not out of the question we could see a breakup of the eurozone. done iss outbreak has it has led to a heightening of animosity among the sovereign europeans who feel northern europeans have let them down because they've had to rely on china and russia for their protection equipment and they feel at the beginning of the crisis very abandoned by northern europe.

of course, you've always had a big convergence of productivity. the south is obviously much weaker. it is now the whole weakness being aggregated by the hit to the tourist industry, which will take some time to get back on its feet. so yes, these are challenging times. lagarde has expressed the need for a common fiscal , there are some challenges and this could all spiral into something much more ugly if there is growing resentment among europeans. i want to talk about the opportunities. lagarde warned of the w's. war, and rolling lockdowns.

you would say to me it is luxury goods -- i am looking at her luxury goods featured on the performance year-to-date and they are still nowhere. why are you convinced of luxury groups as my reprice trade? catherine: what it really comes down to is the characteristics of companies, and what we like our companies with -- are companies with strong brands and robust balance sheets, good cash flow generation. many of the luxury goods companies out there have very strong brands that are able to weather difficult. ands -- periods on this they play on china and the burgeoning middle class there and desire to spend. things normalize, we should see good demand coming out of

countries like china. manus: it is all about pent-up demand. hold on to those thoughts. morgan stanley warns about inflation. ♪

manus: good morning from bloomberg's middle east headquarters in dubai. i'm manus cranny and your top stories this morning. the moveocks are on amid signs the coronavirus is stabilizing in europe. boris johnson eases the uk's lockdown. boc promises measures and

saudi arabia confronts its own predicament by slashing spending and crippling the b.a.t.. the eu commission threatens to sue germany. ursula von der leyen tuesday -- issues a rebuke over eu bond purchases. the debate's life. -- live. there are options trades out there saying we could get the -45bip -- we could get the -45 bips. we hearar rolls over, it is going to kill the dollar. catherine doyle says less likely valentmore likely benefi helicopter money. of thelook at a few other markets, s&p futures, nasdaq undoes losses for 2020.

china promising stimulus, japan promising stimulus and tech up. it is all about adhesives. first sales, 4.9 billion. they are ripping up the guidance ofk and this is the core what the earnings season has been. rip it up, and start again. i'm talking about the guidance and their allies the point. do you know when europe is going to open up? is it is going to be a war or rolling lockdown? first quarter was impacted by the coronavirus, no full-year guidance. .9%,ic sales dropped by negative to the coronavirus and the global case count continues. this weekend, the latest data

gives a number of the 4 million. that is with the situation improving in many countries. in italy, among the countries reporting the lowest fatality since march. the u.k., they have outlined plans to ease lockdowns. in the u.s., the new york --ernor is replacing releasing more details about how the state could begin to reopen. the state versus new york, two different things. the coronavirus will end a 30 year run of deflation forces. that's the view from morgan stanley, who say the return of accelerating prices will overshoot the central bank's targets. dani burger has the proposition to bring to you. back in the studio, back at her wall. take it away. h ai: i'm back and withi surprising call from morgan stanley, saying inflation is to come to overshoot central-bank

targets. that's because we've had coordinated policy between governments and central banks, the government spending more than a trillion dollars on stimulus and they say that should be seen as low inflation. isther tenant of the call trade policy, tech giants, and global corporations, they say the growing wealth cap will to close theents wealth cap and it should upend the forces they talk about and the city u.s. is the most at risk of seeing inflation very ted but they say it is going to thisround 2022, but central-bank action, we will see inflation overshoot. manus: doesn't that fly in the face of the deepening disinflationary trends we are seeing around the globe? dani: yeah, this is certainly a contrarian call.

which started to see bets for negative interest rates. part of that is likely traders hedging themselves for disinflation. placing calls we will get disinflation territory for the first time in decades. morgan stanley is saying close theill act to wealth cap but we have seen an exclamation of the wealth cap. small businesses are's -- gap. small businesses are struggling to get loans promised by their governments. that needs to change for morgan stanley's call to come to fruition, but we are seeing people like bank of america saying interest rates are likely to be zero for perhaps the next few years because it is not even what happens when the coronavirus ends. when it ends, we might have the scars of this pandemic that keep demand low and causes prices to remain low, as well. manus: certainly a debate which will be charged. good to have you back in the studio. the first word news this monday

morning as we set the agenda, the u.k. with no immediate end to the lockdown. boris johnson loosened some restrictions, telling people who can't work from home to go back to work. the government's stay-at-home slogan is being read -- replaced with stay alert. some critics say the u.k. policy lacks clarity. in the u.s., vice president mike self-isolating after his press secretary positive for the coronavirus. negative everyd day according to a spokesperson and he is back in the white house today. the european commission is threatening to sue germany after the country's constitutional courts challenged the monetary authority. ursula von der leyen says the final word of the eu law is always spoken by the european court of justice, adding that eu law is over national law.

to come fory be yet u.s. unemployment, the warning from minneapolis fed president neel kashkari. he says congress should step up and consider providing more help. he made the comments on abc this week after u.s. payrolls showed an unprecedented loss of more than 20 million jobs. global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. coming up on the show, the pboc says the country faces unprecedented economic challenges from the pandemic. strong economic policy to counter the hit to growth. we discussed. this is bloomberg. ♪

manus: i'm manus cranny in dubai. inflation versus deflation was the theme, morgan stanley says the coronavirus will end a run of disinflationary forces. catherine doyle is still with us. here is the debate. two-year, five-year breakevens in the chart and people are beginning to that we will see a -- inflation and we seek trades go on five-year inflation spikes. do you think given the $8 trillion of stimulus, this narrative is over? it is toast? it is a valid debate to have because it depends on your time horizons. in the near term, the big risk is deflation. ofre may be risks -- areas

micro inflation. the fiscalnger term, stimulus you have seen, it is difficult to argue you won't see inflation and we are coming from a low base. from our perspective, you need to have a portfolio that is fromtured to insulate it inflation. there is a balance and i think inflation is more likely to emerge over a two to three-year period. hey will take some time to come through because -- it will take some time to come through because you have a big disinflationary jolt coming from covid-19 and the oil price fall. is powerful asn a disinflationary force in the near term. you identified the

three-year part of the curve, pricing zero as a bullish view on inflation, but your hedges gold. is that a correct analytic of what you said? catherine: our view would be because the markets until recently hasn't been pricing inflation,terms of it doesn't take much to have a bullish view on inflation. buildour view you need to it into your portfolio so we have significant holding in a proven hedge over inflationary. things -- inflationary. , wenflationary periods expected to start performing even more. it has had a decent performance year-to-date. view, can i test the maybe we need to shift ever narrative about what we perceive to be inflation because if we are trying to go from -40

percent gdp on a quarterly basis in the united states of america, that is 1.5% growth. yearsill take 10 according to jpmorgan asset management. we'll be talking about inflation, what are you really talking about? you are not talking about rampant inflation at 2% for 3%, you are talking about a renaissance. catherine: a will be a renaissance because we are coming from low -- a low. we've also got headwinds for inflation, an aging population, dead. -- debt commuting consumers, corporates, and the force of technology which is both disruptive and in many ways has downward pressure on prices because you can do things more efficiently and more cheaply. it is a bit more complex than just saying inflation is going butome back full throttle,

certainly everything is relative, so we've had years and years of nonexistent inflation. one of theed, well, sources people are saying the disinflation threat comes from is china. let's talk about the pboc because they are facing an unprecedented set of challenges from the pandemic and pledging stronger monetary response to counter the growth. this is the core of what they say. he will pay more attention to economic growth and jobs, will be morehat it flexible, appropriate, and the central bank says it will keep liquidity at a reasonable level, avoiding excess liquidity. myt is the bit that through -- threw my eye. dexterity around some of the micro policy, but omitting to avoid excess liquidity.

what does that mean to you? how do you play that? catherine: well, china has been one of the economies that hasn't been doing as much monetary pasty in this recent versus the u.s. and other parts of the world, so i think the fact china is prepared to come -- en force is something we have been waiting for and will accelerate the exit from this coronavirus induced slump we are seeing. it is almost inevitable that they have stepped in. i don't think any economy can stand on the sidelines in this, and i think clearly china is hugely influential. they are the ones who have been

driving much of a growth that we have seen post the financial crisis. manus: you talk about being alert to risk and reflecting that in the portfolio. as quickly asle, overnight and that is never more true than when you assess data at the moment. for thee you looking biggest opportunities, and does china play into that in any way? catherine: yeah, i mean opportunities can come pretty much anywhere in a portfolio like ours, which is multi-assets. -- onabout looking for the equity side, companies that have been really unduly punished, that have very sound can -- that, but we we can pick up at attractive prices and we are certainly playing that china theme through

the consumer, which might seem counterintuitive, but once things do start to normalize, and we've already seen a lot of activity picked up in china, people will be out again spending and there are many ways you can play on that. some of the developed market listed consumer companies have a but itexposure to china, is as much as much about taking advantage of the opportunities as about hedging some of the ink, and we've built cushions, should this play out differently. asset --u are most multi-asset. i just wonder to what extent -- i was looking at commodity plays. i was looking at copper this morning. if i look at copper, aussie come

aussie-kiwi, aussie- powerful fxthe most and commodity plays in regards to china so if china is going to be more powerful, is going to be are there any, commodity vicarious traits for china? catherine: we prefer to play it through two companies, analyzing andactual sales profitability of companies and their exposure to china -- manus: what about the miners? this ist last week said a trump -- triumphant moment for the guardians of capital within martin -- miners. catherine: we don't have a huge exposure to minors. -- miners.

only to gold, primarily through physical gold rather than the gold miners, just because there tends to be more noise about management issues and therefore, physical gold is a more direct way of getting exposure to the precious metal, but we think this is going to be choppy along we way, and therefore, prefer to avoid some of the more cyclical areas, although our absolute isn't cyclicality. that point made expressly around gold and the gold miners. pivoting slightly to a big narrative in the markets this morning. there are three, negative rates in the u.s., china stands ready to do more, but don't -- so does is backbe and the topix into bowl territory. to what extent does asia -- you talked about china via the

equity route. talk about japan and the prospect of more helicopter money coming to their from abe in the japanese economy. how does not bear out in your thinking? area wee: japan is an haven't tended to have a huge amount of exposure to because it really is about -- and we are not allocating by even country or sector. it really is about the characteristics. -- fact they is stepping in abe is stepping in is in keeping with what we are seeing across the world. somewhat unusually, we are all in the same predicament. we all need to stimulate in some shape or form and we try not to obviously the regional split of companies revenues is important, but it is more about what are the growth drivers? what is the underlying financial health of a business, and how

robust is the sector in which they operate? how immune are they to some of the vicissitudes to what you will see and we are increasingly see with this uptick in volatility? they have to be able to whether -- weather some very choppy times. manus: thank you. your calls taken and noted this morning. catherine doyle, real returns investment specialist at newton's investment. thank you for joining us. our ownp on the show, region in saudi arabia and austerity plans. it is the world's largest oil, and that revenue is drying up. the government announces a tripling of b.a.t.. we bring you the very latest from bloomberg. ♪

manus: i'm manus cranny in dubai. 6:54 in london. in saudi arabia, the finance minister says the government is planning to cut spending and cripple vat to 15%. let's get the context. the executive editor for the

middle east joins us in dubai. with me.have you earlier, you said this is about a reallocation in saudi arabia, but the headline of vat is very jarring. a tripling of vat, and financials being cut. >> it is very unusual at a time when governments all around the world are pumping in money, using fiscal measures to keep businesses afloat, to keep business from folding, and to protect consumers. you have saudi arabia coming out and saying we will increase vat, tripling it from 5% to 15% and coming back on these allowances. insisted,minister who saying this is more about a reallocation, the prioritization of spending rather than cutting

-- increasing revenue and cutting spending. -- hee meant by that is said some of the things are already declining, we are seeing governmental spending on promoting tourism, spending on they can reallocate that and focus on health care and the measures they've already taken to the -- keep businesses afloat . like you said, it is an unusual and i'm sure will be criticized by some, but at a time when the economy is under such strain, the double whammy of covid and oil prices, which the saudi budget relies so much on, you have the government coming out and doing this. manus: riad hamade, thank you. our executive editor.

the european market open next with anna and matt. a beautiful day in london and gorgeous day in dubai. ♪

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 nation's largest gig-speed 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. we've always believed in the power of working together. that's why, when every connection counts... you can count on us.

anna: good morning. welcome to bloomberg markets, "the european open." global equities build on friday's gains, shaking off a dour stocks report. european futures point higher. the gash trade -- gas trade is less than an hour away. coronavirus crisis is stabilizing in europe.