♪ nejra: good morning from london. manusejra cehic with cranny live from dubai. president trump calls anthony fauci's concerns on reopening "unacceptable." antibody test is cleared by u.k. authorities. powellir j cal --jay sees long-standing damage from the recession.

steve mnuchin says he sees a bounceback last year. angela merkel vows to defend the euro. the bank of england governor hints more qe could be on the way. we still have breaking news that we are waiting for, looking at merck, first quarter net sales at 4.7 billion euros, the 4.1mate was 4.9 billion -- 9 billion. , 1.1 billionda euros for the first quarter, estimate was 1.0 8 billion. that number coming in a little bit stronger in terms of the adjusted ebitda. manus, what have you got? you think about pharmaceuticals and telecoms, they are two of the most robust sectors in this whole covid

challenge. a limitedas had impact. they are confirming guidance. using the word limited virus , they are using more broadband. up by 10%,er ebitda as are a lot of recovery markets in recovery mode. deutsche telekom's down on the year. much will theyow be rewarded for that sticking to guidance. good morning. glasses on, glasses off, i don't

know. we will talk about risk on or risk off in a moment. goldman saying they see the u.s. jobless rate peaking at 25%. we have been talking before the , j.p. morgan saying that they see the yen appreciating over time. we signed yesterday as jay powell expressed concern about liquidity issues, solvency issues. red onwe are seeing some the screen and asia. u.s. futures on the back foot as well. david tepper saying that the stock market is the most overvalued since 1999. seeing some broad-based risk off.

forayllar reign supreme fourth day, more or less. unemployment dropping the most on record. oil is the outlier, slightly on the front foot. we did get a drop in pushing stockpiles in data. moving on to our top story. coronavirus update. a you and study says the four yearsuld remove of growth. president trump has publicly disagreed with his top infectious disease official anthony fauci, accusing him of wanting to play all sides of the acquit -- of the equation, after factory warned that opening -- after fauci warned that opening too quickly could lead to flareups. it is not the first time the president has disagreed with anthony. fauci's testimony to

the senate, he warned about opening up the economy to quickly. president donald trump was asked exactly what he meant about playing: -- about fauci both sides of the equation. manus: we will take a pause for thought and come back to you in just a moment. technical issues. as we adjust that, we will return to new york in a moment. let me get you up to speed with the first word news. italy has doubled down on stimulus after approving a much delayed 55 billion euro package. it aims to boost liquidity and aid families had by the lockdown. , tax funding for companies cuts. theas originally dubbed april decree but was pushed back after much disagreement in rome.

aericans will likely get coronavirus vaccine first, a french pharmaceutical giant says, because the u.s. was first in line to fund the research. they are warning that europe risks falling behind in less they step up efforts against the virus. a jump in children, according to a study and reports in europe and the u.k. it is like kawasaki disease, which causes blood vessels to inflame. while children remain at lower risk than older adults, this not zero. the risk is 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. let's go back to annmarie hordern in new york. let's go back to the president's key disagreements with anthony fauci. annmarie: he says that dr. anthony fauci is playing all sides of the equation. when pressed on what he meant, president trump said he did not think the answer was acceptable. be tooaying that it may premature for some communities to open de-risk flareups. sayingchools, dr. fauci we cannot be cavalier for kids being immune. we had seen a bit of a testy relationship between the administration and dr. anthony fauci, but it is still quite remarkable. top is president trump's

infectious disease official. to a fewwas speaking people in new york over the past 24 hours and they said, you will not see that man back in the white house. i think that will be the shock if he is back in the white house. so whato fly again, news? yourrie: good luck for weekend. roche, this antibody test has approval of the top authority, and premised are boris johnson has called the antibody test a game changer. there been some missteps with faulty tests. testing, there is obviously a need for this.

the prime minister has come about thense pressure handling of the coronavirus, especially in these older health care facilities, older homes. on top of that, as he tries to ,et the economy back to work about how bad those figures were. this roche test, certainly a reprieve for the u.k. government's response. nejra: thank you so much. coming up, a gloomy u.s. outlook. fed chair jerome powell warned of dangers but treasury secretary steve mnuchin had a more optimistic view. this is bloomberg. ♪

manus: it is "daybreak: europe." more, markets, we need more stimulus, those are the calls from jay powell. did he really slash and burn on negative rates? goldman sachs, talk of a recovery. of the about the shape recovery, not much belief in a recovery this morning. , al host ofes down people coming out and decrying valuations in equity markets. take a look at the bond market. did jay powell do a good enough job? still pricing in negative rates. choice?our

his royal highness abdullah been salon saying that issues have eased and they are making an effort to rebalance the market. u.s. economy faces an unprecedented set of risks from the coronavirus. that is according to the fed chair, jerome powell, who also pushed back against the idea of developing or deploying negative interest rates. view onommittee's negative rates really has not changed. this is not something we are looking at. the effectiveness of negative rates is mixed. it is an unsettled area, i would call it. i know there are fans of the policy but right now it is not something we are considering. --manus: the treasury

secretary steven mnuchin socked to reassure investors after stocks slumped to a three year low. the treasury chief told fox news that he thought powell meant that there could be significant downside risk, but if the u.s. reopened slowly and carefully next year, we will be back to having a great economy just like the one before. david bloom has been listening. atis the head of fx strategy hsbc. as the "luv!" opportunity. what has the greatest propensity in the hsbc house? economists came out with new forecasts. we talk about the u.s. economy falling in the second quarter, 45%. that ain't no v, baby!

it is looking like more a u or l -shape. that is why we talk about luv, the l, the u, the v. 30 is still a u. we will get a bounce. these numbers are single digits. it is crazy. we are in the bottom at the moment. the point is, of course we will get a rebound, of course there is pent-up demand. but, how long it will take for the level of the economy to get back where we were before the virus. in two years, that looks like a u to me. is the onev scenario scenario where you see the dollar losing out. and you say the l and u are more likely. how long does the dollar reign

supreme? david: when we move off this risk on, risk off, we look at the equity market, if it is down upot, we risk off, if it is a lot, we risk on. we have to gravitate towards one of these letters. once we do, than the whole foreign-exchange changes and the dollar will weaken a bid. i would not be too premature. the dollar is still the king of the pile

dollar most manifest for you? david: emerging markets absolutely smashed to pieces. 30%, southdown 25, africa, brazil, mexico. the big game changer is cutting interest rates into a currency crisis in a sense. that is a game changer. historically, emerging markets raise rates, but now they are cutting rates, doing qe, saying, we don't care about the currency for the moment. those currencies are under massive downward pressure. asked a few people recently, including mark mobius, about this. for a lot of em's, qe will be used to fund budget deficits. i asked whether that would lead to capital outflows.

some people said, no, we are not worried about that. it sounds like you are. what do you mean they are not worried? emerging markets, cutting interest rates basically towards the zero bound, doing qe while the currencies are falling, you've got to be kidding me. of course it is negative. they are being smashed. should they care? that is a different question. usually, you care that the currency is falling because it will create inflation. that squeezes the real and comes of people. andprotect the currency protect property. because there is no demand, inflation, that is a different story. the currency is under pressure. they are cutting rates, doing qe.

ofcourse, there is lots downside pressure. who are you speaking to? you shoulds sake have me on the show more often. manus: we don't have you on the show often enough. take us through the consequences of that. em,say the losers in the rand, looking at mexico. are we at the beginning of that journey or is there more to come? we are saying, get used to these levels. it is not just come of these currencies are all going to bounceback, everything will be fine, you have these rands at 1 8. you have your turkey at seven. get used to it. don't think that you saw numbers before and they are coming back.

we are not looking at much of a retracement as the story. that is the main point. if you go wcrs on your bloomberg, you can see the year to date numbers. they are awful. we are not expecting any come back. other economies, yes, we are expecting something of a comeback. i think they em, are pretty damaged now. nejra: interesting, expecting a comeback in the aussie, the worst performing to date. lots more to discuss with david bloom, he stays with us. coming up, the coronavirus prompts jp morgan to rethink its long-term view on the yen. we discussed the haven status next. this is bloomberg. ♪

nejra: this is "daybreak: europe ." here is what you should be watching out for today. monthly reports and the economic bulletin. p.m., and jobless claims for the week that ended may 9. and, later, dallas fed president discusses issues with the dallas mayor. neel kashkari discusses our economy and prices in a webinar with the economic club of minneapolis. atlanta fed president raphael bostic in a webinar hosted by the georgia grantmakers alliance. the coronavirus will erase four

years of growth from the economy and may push 130 million into poverty by 2030 according to the un. drop in global2% growth this year. meanwhile, the pandemic has prompted jp morgan to rethink its long-term view on the yen. it's official forecast, at 107 per dollar by year end. it has the currency trading around current levels but analysts highlighted economic and policy trends that could see sustained gains. david bloom from hsbc is still with us. you never really bought into the thesis that the yen was a safe haven. why? the geneticook at pattern of currency. you go back and you say, look, how is this currency correlated with risk?

what you use for risk is the s&p 500. how does this currency perform andy s&p goes up, badly, when the s&p goes down, well. that is its genetic pattern. in mathematics, we would say it has a coefficient. we worked out basically aldi genetic patterns for the currency. in the real world, other things matter. what happens is other things start dominating. in a risk on, risk off world, they don't. -- therego risk off are reasons why the narratives do not eat the mathematics, and the mathematics tell you this is a currency you want to buy when people are hitting risk. that is just the way it is. the leopard never changed its

spots. spiking upward at one stage, everyone got scared, but no, sorry, the genetic pattern is fixed and there is not much you can do. the yen is a safe haven currency. don't let anyone tell you otherwise. we always listen when you come on the show. we are both very attentive. nejra place the tapes back. you quite like gold as well. the narrative is shifting globally on negative rates. rpm says the dollar market is testing them. a provocation by markets on negative rates. are we under assuming the ratessity for negative globally in 2021? are doing reason we that is central banks don't want to do it. sweden went negative.

it is not doing anything for the race toward zero. 30 years of 20 or negative rates, they said, they are not great. what is this inclination, has it done for them? nothing. so what is the point. looser policy, more fiscal policy. the thing is, it seems that there is a lower limit and the lower limit seems to be zero. yes, the market is pressurizing the central bank but the central bank is saying, we don't want to do this. please leave us alone. who will in a: moment. coming up in the show, the european lockdowns are easing. steps are being discussed about a revival in tourism. we will hear from an earlier

interview with a european transport commissioner. ♪

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♪ manus: good morning from bloomberg's middle east headquarters in dubai. it is "daybreak: europe." your top stories. president trump calls anthony fauci's concerns about reopening unacceptable. an antibody test is cleared by european authorities. fed chairman jay powell ways in on stocks. he warns lasting economic damage from coronavirus.

treasury secretary steve mnuchin says there will be a bounceback next year. italy's government signs off on a 55 in stimulus package. the bank of england governor is on the more qe way. nejra: as you just said, jerome powell weighing on the u.s. equity market yesterday. interesting that he just said that liquidity problems could become solvency issues. he did not rule out negative rates completely. a chorus on wall street talking about the overvaluation in equity markets. manus: the rates market and the fx market heard two different messages. politically, the dollar is the supreme currency. certainly, the rates market, they just did not get the message.

they want to propagate. let's have a look at the rate board. april futures, fed fund futures, just touching up against the negative rates narrative. the evidence is mixed. jpm says the benefits will outweigh the costs. the dollar rises. fx traders heard something else. global risk means the dollar will remain the supreme leader. that more qe is on the way. stocks under pressure. david tepper talks about, as ominous as 1999. the 594,000is people have lost their jobs in australia. so you are looking at a crashing down unemployment. apparently the russians and the saudi's believe that we are

going to apparently rebound the apparent oil market. let's get to the latest developments in the coronavirus. a u.s. study says that it could remove four years of growth from the u.s. economy and push 130 million into extreme poverty in the u.s.. the president has publicly publiced with his top disease official anthony fauci as fauci warns that reopening the country to quickly could lead to flareups in the virus. in the -- in europe, the test from roche has been cleared by the public health authorities. the commissioner for transport in europe has discussed the steps being taken for a continent-wide revival. we spoke to her yesterday.

>> member states would like some guidance on the european union. we had experienced, with the lockdown starting to loom, that the lack of coordination brought a lot of congestion and issues across borders. now, everyone is looking to us to say, when are we going to open up? relies onte decision the member states. the epidemiological situation in each member state is so different. this is up to national authorities under guidance from the european centers for disease control to decide when they are opening up and for what is to nations. what i can do, and what we are doing, is say, when we open up, these are the rules you should put in place so that people will travel.e to

of course, it is a no-brainer, but it is good to have in place. and wantsingle market to have the same rules in place all over member states. economy depends on tourism and makes up a good proportion of gdp. how much of the 2020 summer season do you think could ?ossibly be salvaged ms. valean: it is the european union and we are so different. there are destinations that are not that bad and destinations that would be more eager to open up. there are others where the situation is not quite stable yet.

i would say there is a difference between member states. we think we are going to win this and opening this summer because i have witnessed already that there is a slow start in the reopening destination for air flights. how recommendations put forward today. rules to beimal , forved for the hotels transport modes. encouraged toore open up for tourism purposes. >> commissioner, how concerned are you and your colleagues concerned about a resurgence of coronavirus if you allow countries to continue with -- ms. valean: it is hard to say.

of course, we are worried overall with the situation. the fact that we do not have a vaccine or treatment puts a lot of burden on the decisions to be taken on the other hand, we are observing what is going on, how things are evolving. again, we have a vaccine or treatment. we have to learn to live with the virus until we have a vaccine or treatment. we have to learn to travel with the virus. we have learned to observe more security features. of yourself as how travel by plane looks nowadays and how it looked 20 years ago, it is much more different. i think, with some rules in place to limit and minimize risk, people will learn how to protect themselves and continue to do economic activities or

travel or leisure activities with more precaution, and i think it is a learning exercise. will would say, first we learn to live with it, then we can think about going to more freedom in how we relate ourselves to this issue. europeanat was transport commissioner un. -- commissioner adina valean. after months of lockdown, some companies have begun reopening, the hope is that a slow transition will get the economy up and running. here with details is bloomberg's has focusedeveryone on the high-frequency data. states relaxing lockdown measures, have we started to see

activity pickup yet? dani: the high-frequency data shows very tentative signs, extremely tentative. it is not translating for what would be considered economic activity. data,g at the economic more that have been effective, retail, recreation still down 60% or more. denmark has gotten better. last week, a lot of those categories were in the red. going to parks has picked up a lot and the driving has also picked up a lot. people are getting fatigue of the quarantine but instead of going out and spending, they are just going to parks instead. that does not lend very well to say, the economy is revving up. it is really a slow grind.

many people are going back into their headquarters for the large-cap companies, still 95% below the normal level. trading in u.s. stocks, big companies, but still, basically no one is showing up to the headquarters of their offices in the u.s. twitter certainly going to offer -- offer people that opportunity if they want to work from home after this crisis. let's talk about power, and we use it in our region for what is going on. what is it indicating? dani: for europe, as you say, really important, european power crises -- power prices have slumped 70% this year. the biggest pickup in italy.

it had some of the biggest downturns. some other troubling things here. germany starts to rise up again and we get a relapse of cutting back on power usage. perhaps some of this is fears of a second wave. but still, that does not necessarily look at. the countries we saw declined to do extreme lockdown measures. this shows the difficulty, as you start to open up economies, you see signs of life, then it flatlined. a long way to go, considering consumer behavior might carry scars of the coronavirus. these are very important trading indicators. everyone uses this in the mobility data. whether you are looking at it, and overall macro picture, people are inputting it into how

they treat stocks. nejra: something to pay attention to. thank you so much. let's get to the first word news. spending more money to tackle by economic turmoil, caused the coronavirus pandemic, will be worth it. alsohair jay powell is betting down suggestions from president trump that the central bank should reject negative rates. a warning that the u.s. jobless rate could be get any 5%. but treasury secretary -- at -- could peak at 25%. the treasury secretary mnuchin said next year, a great economy just like before. the u.k. plans to ease restrictions. the u.k. health authority has cleared an antibody test from roche. prime minister boris johnson previously described these

antibody tests as a game changer. 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. manus: a message from the governor. the bank of england governor andrew bailey offered another hint that more bond purchases are on the way. we discussed. this is blumberg. ♪

nejra: this is "daybreak: europe ." yesterday, equities down.

two big equities warning. europeres in asia and point two lower openings today. you are seeing stronger dollars and most of the risk off tone, but the yen, and oil on a front foot. in the u.k., the government says a program for --f-employed people received 110,000 people have applied for cash grants by noon wednesday. the bank of inland governor andrew bailey offered yet another hint that more bond purchases are on the way. more that they expect quantitative easing from the bank and that policymakers have kept options open to do more than the 200 billion pounds they announced in march. david bloom is our guest this

morning. do qe, what kind of scale up you expect from the bank of england. and is sterling already pricing that scale up? david: i think it's far as pricing in, as i indicated example, new zealand, the u.k. talking about theseu can't just trade one at a time. what really is happening for the moment, the relationship to risk. i think the impact at the moment on sterling is incredibly limited. it doesn't matter what you do practically. what does matter, if you come out of this, if you have a u-shape, you more buying power. you keep pushing, keep pushing.

economy that does not really have massive fiscal firepower. for four years, another 7.5% of gdp set aside. point, sol starting that is the issue. i think the monetary responses are maxing themselves out. i don't think these negative rates matter. it is not a demand problem, it is a supply problem. that is why the fiscal side will push hard. those with firepower will do the best. nejra: on that fiscal point, and your note, you say that the euro will not fare well. this is my favorite part of your note, where you talk about the euro and use one of my favorite quotes from anna karenina. you point out that the fashion

for risk entrees reverse, therefore euro shorts have been cut, that helps support the euro. the market has begun to price in the risk of a euro breakup at all? "all happyquote is, families are the same. all unhappy families are unhappy in their own way." europe is an unhappy family. italy at 10.5% roughly around fiscal deficit, debt to gdp, heading to the government or the european commission estimate. running a surplus, you would run a big deficit. billion never really raised -- spreads are going a

little bit against bunds. this is a problem. when we come out of this, will they mutual eyes the debt or not? if not, how will italy carry on with the spiraling debt to gdp? uncomfortable questions that are asked. by the time they work something out, the euro could be much lower than today. nejra: david bloom stays with us. coming up, china, $28 billion of funds from the one year lending facility mature. the efforts to stem the fallout, next. this is bloomberg. ♪ ♪

manus: it is "daybreak: europe ." to china. it is surprising that they are standing pat on letting $28 billion worth of funds and the one year lending facility mature today. markets were expecting the pboc to rollover the funds, or some of them. the long rate by 20 basis points after the central bank vowed earlier this week to use more powerful policies. they have not delivered thus far. savings plans for the u.s. federal workers, delaying a move to index with chinese stocks. the move comes after they face pressure from trump and his administration to block. david bloom us from hsbc.

when you listen to the narrative about what we expect from pboc, could torpedo the yuan more so than anything else, would that be a fair assessment and your assessment of where the yuan is at the moment? david: no, i think they are click bait. this currency has hardly moved against a dollar that has been totally resurgent against the real, massive rally in the dollar, it -- and one of the currencies that has been pretty stable, that is nothing year to date, is the renminbi. this has been a calm currency and under control. there is no way, this idea that the chinese will somehow weaponize the renminbi.

the last thing the chinese want is for the renminbi to be in the spotlight. the narrative is nasty enough around the world. keep calm,y-on -- carry-on. thinking long-term, which the chinese usually do, we are talking about a stable renminbi. nejra: i remember a time when almost on a daily basis, we were talking about the yuan being a driver for a lot of the fx space. it does not seem to be right now. how are you taking your cues from china more broadly? david: it is very interesting, when you look at the brazils, south africas, mexicos, turkeys, there is no anchor and they are doing aggressively. you look at india, indonesia, malaysia you know india is not selling off in the right way

because they have -- in the same anchorause they have an of stability, and that is the renminbi. anchor ofed is an stability and it is act in that way. the weaker kinds of asian currencies are much more stable than currencies around the rest of the world. just compare themselves to the dollar and they are getting completely crushed. --se other asian currencies doing fantastically well. 7%, korea downwn 6%. that is tiny compared to those others. nejra: david bloom, you have been our anchor of stability this hour. global head of fx strategy from hsbc. the european open is up next.

futures point.s. two lower opens today. this is bloomberg. ♪

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>> good morning. welcome to bloomberg markets, the european open. i'm anna edwards alongside matt miller in berlin. matt: today the markets say that ain't no v, baby. hsbc's david bloom lends his voice to the people cautioning a quick recovery. futures pointing down. the cac trade is an hour