nejra: a new cold war. china warns the u.s. of a further risk of relations. they start the week higher. buyer settles. bloomberg learns a deal on substantial sources. and boris johnson faces criticism of all sides by the

top aide who broke the lockdown rules. ."lcome to "surveillance i am nejra cehic in london. we get a sense of the u.s.-china protests in hong kong. equities, of course the u.k. is closed for a bank holiday today. u.s. cash stock and bond market closed as well. a positive sentiment coming through in u.s. futures. third day of dollar strength. that speaks a little more to a slight risk off tone. in terms of oil, it is being anchored around 33 dollars a barrel but in the green today. confidencebusiness index is 79.5. the estimate was 78.5, so that coming in a little better than expected. in just a minute, we will speak with the ifo institute president clemens fuest. first, let's get to bloomberg

first word news. >> thank you, nejra. were hit with tear gas in the city. new national security legislation, being described as the vegas for hong kong since china took control in 1997. here in the u.k., prime minister boris johnson's most senior aides are facing growing calls, breaking lockdown rules. be family was supposed to self-isolating. calling the actions of and defensible. is barring most non-us casesns from brazil after in the south american nation spiked. follow curbsons already placed on visitors from

china and europe. in israel, prime minister theamin netanyahu was read charges just weeks after being the fifth term. israel's longest-serving leader gave a defiant speech. he accused opponents of trying to trouble him. global news, 24 hours a day, on air and @quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. i am leigh-ann gerrans, this is bloomberg. nejra? nejra: leigh-ann, thank you so much. let's get back to the ifo data that we had a little bit ago. the survey is calling for 75. that is better than the previous reading of 69 .4. so that his expectation. the current assessment of 78.9 a little bit softer than the

expectation at 80. the prior reading was 79 point five. business climate coming in at 79.5, better than the survey of 78.5. the previous reading was 74.3. that is what we have got in terms of the numbers coming in from ifo. joining us now is clemens fuest, president of the ifo institute. thank you so much for joining us today. can you characterize the climate, the expectation, the assessment behind the numbers? dr. fuest: yes. i think what we see here is the impact of the easing of the lockdown. companies say is ok, our current situation has improved, it is even slightly worse than a month ago, but we think there is hope for the future. there is, so to speak, light at nnle,nd of the tu simply because restrictions are

being lifted, -- the tunnel, simply because restrictions are being lifted, and that is a good sign. manufacturing say it is very bad. in trade and retail, companies say it is very positive that we have been able to open up again, even if there are restrictions. even if the number of customers admitted to the shop is limited, but at least they see some progress. so there is a lot of caution here, but at least the mood is not as catastrophic as four weeks ago. nejra: clemens, i find it interesting the exchange you made between manufacturing and retail, and i wonder why you get more positive feedback between trade and retail? i understand lockdown is easing, but there are still, first of all, quite a little bit -- quite a lot of restrictions in place and the fear of a second wave and further lockdowns. dr. fuest: well, i am not sure

how strong the fear is of a second wave in germany. it is may be discussed less than in other places. markets,cturing, many from italy, spain, are still closed, so companies really do find it difficult to get started again, whereas in retail, the shops are open. they were shut down completely, which manufacturing is not. and retail, shops were shut down completely in april, and now they are opening again. that explains the improvement in the mood. still, most companies continue to be pessimistic, but the pessimism is not as strong as it was four weeks ago. nejra: ok, so still pessimistic but not quite as pessimistic as before. what does that mean for the shape of the recovery, and your opinion, clemens? does it look more like a v, a u, or something else? dr. fuest: to me, it does not

really look like a v. i think there will be a quick recovery, but not to the old level. we will stay at the old level. economists have talked about a 90% economy. it looks like we will stay at something like a 90%, a lower level for a longer time. i do not think it is really a u. there is some recovery, but the economy will be subdued for some time. ok, makes sense. in the meantime, clemens, this eu 500 euro economic recovery plan, we spoke to finance minister wolfgang sure block over the -- wolfgang schaeuble over the weekend, and he spoke to this. how do you feel both that it comes through and that it has a strong impact? think this isl, i being seen as a positive signal but not much more.

there is a lot of talk about whether this will be spending or the credit, to approve countries. sweden, denmark, and netherlands do not like the proposal that came from germany, so i think this is seen as a positive signal, but not more. nejra: ok. what does this mean, then, for the prospects for the ecb? its bond- ecb expand buying at the next meeting in june? dr. fuest: i think it is likely the ecb will do that. again, what the impact of that bond buying will be is an open question. a lot of bond buying has been announced and is going on, and conditions on financial markets, in particular, conditions in the corporate bond market, are not the main problem. they have improved, and companies do not have these same problems they had in march and

getting liquidity or getting credit. so i would expect a slight increase in the bond buying, but i do not think it will be a game changer. nejra: right. what is your assessment, then, of the german court ruling? of course that is one of the reasons something the ecb might move more quickly and expand -- a while the iron is hot, if you like. dr. fuest: i think that the ruling is complex. ecb, i restrain the think, in the medium-term. it does apply to the current measures, and that the general level, it is a warning to the ecb not to be too aggressive about its bond buying. but the ruling raises more fundamental questions about the the overall institutional architecture of the union. so i think this ruling does include a number of risks. as far as the ecb is concerned,

i think it will force the ecb to be a bit more cautious about bond buying. there is -- i do not think there is a strong impact on the current measures, foot if we think six month ahead or a year ahead, i think the ecb will have to be that much more cautious. nejra: and i guess that puts even more pressure, then, on the fiscal side. we have heard about some hard-liners in sweden, the netherlands, for example, edging toward some sort of compromise. my thanks to clemens fuest, president of the ifo institute. coming up, the chinese foreign minister says some american leaders are pushing toward a new cold war. this is bloomberg. ♪

nejra: economics, finance, politics. this is "bloomberg surveillance." i am nejra cehic in london. now, china has warned that american leaders are pushing toward a new cold war. the foreign minister has says that the situation is dangerous and could endanger global peace. tensions between the two countries over the coronavirus have plagued hong kong. let's start with hong kong. protests anew over the weekend. where are we with the security debate? >> the much delayed national people's congress, people

looking at the policy dump arrived at the conclusion in stimulus, the pandemic, a wait and see approach, others see the target of the duty growth. here think hong kong and also another western capitals, the big headline was this new hard-line approach to what is to be done in hong kong. china making dramatic moves over a new national security law and inevitably the biggest rally led by protesters in months. i think they are gathering in the shopping area. something police were waiting for them, and by all accounts, law enforcement when and hard, using water cannons, tear gas. i think 180 people were arrested after pitched battles of the two sides on the streets. this demonstration does appear to be pretty vague in detail. it is nonetheless being seen,

the very principle of it, the biggest erosion of hong kong economy as the chinese dictate control of this former british colony. it has already heightened tensions, andt several pro-democracy legislators have come out and said that this is the end of hong kong as we know it, nejra. i think similar demonstrations are planned for later in the week. how could this evolved, especially given the world is still in lockdown? ishaad: the lockdown really coming to an end here in hong kong. enforced, thatng you cannot have gatherings over eight people. isnational side of things now where people are looking to come what can be done about it, because it is this blame game ever since the coronavirus started.

transfer,chnology something like 33 entities now targeted by washington, over china here as well. of course there is the covid legislation, human rights, don't forget the weaker population -- uigher population. - wang yiget, when ye - warning the u.s. about pushing to a cold war. the administration has to balance any harsh penalties of beijing without really being harmful to the hong kong and the interests of the united states. if they have to limit them to bring harm to the chinese actual government itself. narrow approach sanctioning individuals or businesses, maintaining hong kong's autonomy, special treatment of the

territory. the u.s. could announce the hong kong democracy act, according to the secretary of state, that hong kong continues to warrant special treatment as a non-taunus region. andeployed -- as autonomous region. if deployed, hong kong could lose its special city status. on top of that, there is the national anthem bill, which means that anybody who is in any anthemulting the chinese and criticizing it,, they could also find themselves in jail. nejra: we are running out of time -- rishaad: certainly it is getting more. yeah, on that point about what you said about the china's foreign minister as well, what does it mean about u.s.-china relations about further tariffs?

just briefly. rishaad: absolutely, further tariffs, 33 entities that the u.s. is moving through at the moment. result in further tit-for-tat retaliation as well. the u.s. expanded the entities list. a restrict access to american technology and other items. some of the organizations affected issued statements opposing the move, but of course this has meant that there are further signs of the decoupling taking place between the united states and china. and, to some extent, we are getting, you know, a rejiggering of supply chains taking place during the time of the coronavirus, because they could not reproduce it, and many ways. the foreign minister says the latest moves are a u.s.-china

decoupling 2.0 or 2.5. it is worse because america has become one of the countries worst hit by the pandemic. of course, it is harder hit in wuhan, where it came from. biggest economies class on a range of issues, from trade to taiwan, a new cold war of the year as well, and this is, you know, you know on friday we had china saying the national people's congress would maintain appearance of a phase i trade deal, the question is now -- for how long? and what does the united states do in the face of the stark in a relationship between the two countries? nejra: "bloomberg markets" coanchor rishaad salamat. thank you so much for joining us. coming up, comings and goings. we will discuss next. this is bloomberg.

♪ this is bloomberg. ♪

nejra: this is "bloomberg surveillance." i am nejra cehic in london. boris johnson has launched a staunch defense of his key adviser dominic cummings. they have been calls for his resignation. dukes, -- now, kate

kit juice, fx strategist at ckes,te generale -- kit ju fx strategist at societe generale. that the market is concerned about, along with the economy, the threat of negative noes, and then know postponement and a bad brexit, i've nothing dominic -- it pains the agenda sort of up in the air a little bit, and maybe people will think, doesn't that increase the possibility of a postponement until we are done with the pandemic? this is much more important. kit,: yeah, you have said,

that the only thing sterling has going for it is that the market is short and bearish. if you are negative on sterling at the moment, what is your way of actually playing that across various crosses? kit: for me, it is a play against the japanese yen. one of the things we have seen in the foreign exchange market is a volatility level, back to almost precrisis levels in many cases. that has been very calm. the fact that the yen is very quiet and that period, a lot of people are getting bored of using the yen as a safe haven. be sure of the plan against the u.s. dollar at this point in time as well. that is not a terrible thing to do. i think it is just, you know, we will have to be patient, if you are short. it is a protection against a mistake. my view, if the mp's keep

talking about negative rates. generales of societe stays with us. thank you for joining us on what is a u.k. bank holiday. more coming up with him. there is still more money to be made in chinese stocks. that is according to mark mobius. we will bring that interview as well. this is bloomberg. ♪ ♪

nejra: economics, finance, and politics. happy holiday in the u.k. or the

u.s. we are seeing a positive tone and the equity markets, despite the war of words between the u.s. and china over the weekend. here is leigh-ann gerrans. leigh-ann: china's warning that some u.s. politicians are pushing the nations into a new cold war. the comments came from foreign minister wang yi, who said the u.s. should give up its wishful thinking of changing china. the relationship between china and beijing has worsened in the past few months. the white house has repeatedly blames china for the virus outbreak. save strategically important companies. richie sooner is looking to rescue any company is whose failure would intentionally harm the economy. german companies and consumers /the bending before the full force of the pandemic.

the economy shrank more than -- shrank more than it has in a decade over the first quarter. april is expected to be far worse before signs of bottoming out this month. and bayer looks to have made progress selling claims that is round of weedkiller causes cancer. sources say it has reached a verbal agreement that could result up to 85,000 of the 120 5000 claims. of its $10 billion plan to end the costly legal battle, the company is set to announce a settlement in june. global news 24 hours a day, on air and at quicktake by bloomberg, powered by more than 2700 journalists and analysts in i'm than 120 countries, leigh-ann gerrans. this is bloomberg. nejra? nejra: leanne, thank you so much. despite the tensions in hong mobius, mobius capital partners spoke about the

opportunities in china. take a listen. mark: there is no question that the tension is rising. the tension has been going on for quite some time beginning with the trade war and a number of other factors so that we can letup in be seeing any this kind of tension. nevertheless, there are lots of stocks in china that can be purchased at a very profitable, and are growing, despite all that we are seeing. i think we have to take it stock by stock rather than making a general picture of the chinese markets. >> help me understand how you screen stock by stock and how that plays into what the government is going to do in terms of stimulus. >> number one, we are looking at stocks that are not going to be impacted by trade war. number two, we are looking at -- we that have a global have many of these chinese

stocks -- alibaba the obvious 1 -- that have a global put pen in the market share in china. number three, we want stocks that have very strong balance sheets. we have tod stage, have companies that are able to acquire other companies and would gain in the market by doing so. alix: can you give me some names? you're talking about chinese company zen how much -- all you hear about is chinese companies and debt. would be the obvious one, but there are a number of others similar to that that would fall into that category. i cannot give you names because we may be buying. but generally speaking, any of these names like alibaba, like $.10, these are companies that

we would be looking at. alix: if, though, some of the companies get big ones like the nasdaq for example, does that affect how you think about them at all? mark: not really. i know congress is going to pass the bill about accounting practices. the companies listed in new york have to follow u.s. accounting. these companies are already doing international accounting, and it would be easy for them to come up with the right accounting practices. i don't see that is a big problem. so i think what you've got to see is any problems in the face as wek -- of sanctions have technology. that is an area that we have to be very cautious. likeu look at a company tsmc, they will be able to chinae any problems in because people globally,

including many u.s. manufacturers. alix: are you worried we will see a supply chain shift that we were talking about because of the virus, or does it not matter as much if you are looking at the right kind of companies that would be more immune to something like that? mark: this is already taking place. you must remember, not only is the american companies that have a supply chain problem, but it is the chinese companies as well. they have been looking for a field out of their own areas out of where they can get supplies. the interesting thing that is happening is that many chinese manufacturers are moving outside manufacture in other countries so they can get under the u.s. trade barrier. so that is another thing you have to look for, and we are looking at such companies. companies that are strong in china but are moving globally and are becoming more of a global supply chain company.

that was mark mobius, mobius capital partners cofounder and partner. still with us, kit juckes from societe generali. what we saw today and on friday as well was a perhaps risk elation of u.s. and china tensions based on the decisions around on kong. protests were revived over the weekend. is now the time for the fx market to start moving on this, or is the u.s.-china tension story more one for the autumn? thatthere is a sense now this is going to remain not very much in the background from now until the u.s. election, frankly. these -- either side appears ready to back down and make it a away -- if there had been --nt where there was frankly, i think it is going to stay with us from now until then nervousness,n

particularly about global trade. is ank global trade advancement already. i do think when we heard the final nail inhe the coffin of globalization with the pandemic, the u.s.-china trade spat, there were a couple before that on the list, being hammered in every day, i think that is with us now and it is not going to go away. volatility,rms of when we were talking earlier and you were talking about how you would express a weaker sterling, doing it against the yen, talk to me about the relationship between volatility and the yen. one would think if we had a collapse in volatility in g10 effects, that would speak to a bearish yen. but your view is different than that. kit: my view is that there is no

volatility at this point. one of the features of this market is the response of central banks that we have seen before, that when they love money that when they lob money -- that when they lob money at the problem, it is kind of like oil on water. we are down to levels of buttility and dollar-yen, in major foreign exchange rates that we have not seen for a while. this will spike up again. so my point is if you think volatility is not going to fall any further, and if you think maybe it stays mostly low but spike higher on bits of news that we get, when those spikes come back, it is likely to be the biggest winner, and if the yen does not weaken, if the yen is here when volatility has been pushed down in recent weeks, the yen is in better shape than it looks. nejra: what about the u.n., kit? we discussed the last time you are on the show, we saw china

set the yuan at its weakest since 2008 just today. are you expecting much yuan volatility here? kit: we worry quite a lot that they might start using it as a especially until now, for a while now, the view from beijing has been very much that that is counterproductive in terms of what it does to domestic money markets. it makes it harder for them to control the domestic money market, control it's important so that it is not worth doing. so what they are doing so far is letting it weaken a little bit, but these are small moves, maintaining currency stability as a key part of their sort of macroeconomic policies. they don't show any signs of wanting to change that, but the dispute is happening elsewhere

because the benefit in terms of that infecting the rest of their global financial system -- the chinese financial system seems pretty clear. and the trouble with china is that they are not going to tell me that they are changing policy before they do it. but they seem settled on this policy. it is working for them. policy they had before, letting the currency weaken, not obvious that that works. oneould they let -- thing is clear, a much stronger yuan is not clear, however. theme, ifcking on the we look at 10-year treasury yields based in at a range of 24 basis points in the start of april, move index that is level but is about one third the almost 11-your high that it hit on march 9, is the treasury market going to be shaken out of its role anytime soon the way the fx market might soon?

be: i think these would lowball environments where volatility is repressed by central bank actions, if that is the right way to put it. talks up in short periods of dramatic excitement. i think we will see deepening pressures on the u.s. yield curve at some point down the road in a way, but the reality is, if we have interest rates that are here for a long time, ruling out negative rates pretty but in the united states, it is very clear they are not going to push rates up until long after fiscal policy has been normalized -- and that doesn't happen until long after the pandemic is behind us -- but the front end of the curve is completely anchored, and the longer end for now is anchored by, if nothing else, central bank buying. there is a lot -- what you get

in that low volatility environment, you get the foreign exchange market after a wild, you get spikes that last a few the on some event before fed gets control again. because in the end, the fed wins. nejra: all right, kit juckes, great to have you with us today. thank you so much for joining us. strategist from societe jenner out. enjoy your bank holiday. that from societe jenner out. enjoy your bank holiday. this is bloomberg. ♪

nejra: this is "bloomberg surveillance."

how will coronavirus change the way we live? u.k. focused build to rent operator offing high incification units manchester -- if -- will people still choose to live in such locations or will -- joining us to discuss all this, ryan atnce, ceo and founder uncle. thank you for joining. >> thank you for having me. nejra: what is the state of the rental market at the moment? i believe previously you said home sales and rentals had been pretty paralyzed by the u.k. lockdown. are we still in that place where the lockdown are starting to ease? think we are. i think we are just starting to crawl our way out. i think what we have learned is that virtual viewings and remote viewings are helpful and educational, but ultimately

whether you are buying or renting, customers do want to see things with their own two eyes. in allowing people to go back into properties and do what we would call social distance viewing, makes a real big difference in being able to allow people to make those decisions. nejra: yeah. can you give us more of a sense on the longer-term impacts that you anticipate from the virus turmoil? we can see beautiful pictures of your properties, high specifications, and a lot of the projects that are underway. we are assuming high rent for years to come. is that an assumption that can still hold, particularly if a lot of people's finances will be strained for some time? ryan: i think a number of different situations will come out of what are the long-term consequences of covid. quite frankly, any other potential pandemics as life evolves. one of the things that has

become very clear that will be a long-term trend is the requirement to work from an office five days a week. that will no longer be the case. in almost any industry. there will clearly be exceptions. if you work in construction or in a factory, your job is on premises, so that is different. but certainly for the knowledge economy that won't be the case. we are starting to see front end of the acceptability of people working maybe two days in the office, three days from home, and flipping that the other way around, alternating. so i think that fortunately for us, i think the home is going to become an even more important sort of feature and asset class for the way people think about how they live. i think a number of the offers living offers that we have will shift.

the space within the building, a certain proportion, particularly our gig economy residents would use, that will get dialed up significantly as those changes start to take hold going forward. nejra: ok, so you see co-working getting dialed up, but what about co-living as an asset class? could covid-19 kill that off as it was starting to become mainstream? ryan: i think it is still too early to predict. talking to the co-living operators, they have their views as to why neighborhoods and all those things will be important. , weink based as a topic will certainly be heightened as in every -- as an area of sensitivity, so how that plays out in terms of what space looks like, certainly in the near term it is a challenge. in our case, all of the uncle apartment buildings are self-contained, normal, residential size departments, and certainly in the short to medium term, we feel comfortable that that level of a normal experience has a little bit more

comfort level for customers for now. investors inbout the sector, ryan? we have talked about the future, ghost virus, some of the potential downside risks. is this going to cause some distress for investors in the sector? how confident do they feel? ryan: from what we are seeing early, i think it is starting to look almost a little bit like the opposite. the whole real estate investment hypotheses around beds and sheds come around industrial, delivery, and living in some way as a granular pretty stable reasonable demand asset class compared to retail or office for different reasons, i think what we are starting to see is more investors become attracted to a ,umber of more stable long-term, almost infrastructure-like cash flow qualities of the residential asset class. if anything at the moment, i think we are seeing inquiries

from an investor perspective start to go up for this particular type of asset. so much for you joining us today. ryan prince, ceo and founder at uncle. up next, a bloomberg's group. they are is said to reach a verbal agreement on its share of roundup lawsuits. we will review the details next. -- we will bring you the details next. this is bloomberg. ♪

anda: economics, finance, politics. this is bloomberg surveillance. bayer is starting to resolve legal problems. according to bloomberg sources, the german health care and agricultural giant has reached verbal agreement to settle a significant portion of its u.s. cancer lawsuits. the deals are part of its plan to end a costly legal better -- battle over its weedkiller come around. joining us to discuss is kim low . congratulations on the scoop. is this a sign that the roundup saga is coming to an end in any way for bayer? it is definitely a positive

step. of course, the company itself has not said anything. but yeah, if you think back a year ago, bayer had lost two or three trials, and the amount of plaintiffs were just piling up by the month, and they -- there really seems no end in sight. it was a really gloomy period. since then the company has managed to stay out of the courtroom, and engaged in these long months of talks. we have seen positive signs in recent months that there was isgress being made, so this the fullest picture yet that we have been able to provide. and the exact number of settlements so far was not immediately clear, but the

estimate that you do have, why is that significant? tim: the first point is that we are saying there are 125,000 roughly roundup suits, the current universe of litigation. and that is significant because until now, bayer has only really disclose the officially filed cases, of which there are about 52,000 as of april. so we are bringing up another 75,000 cases that need to be dealt with. these have been dealt with, or are they are in the process of being dealt with in the negotiations. our sources are telling us that termsf the best cases, in of from the plaintiff's standpoint, the ones that have the best chance of winning a trial, are part of the verbal agreements. and so you have to expect that there is probably a lot of

frivolous cases that are among the tens of thousands of additional cases. nejra: thank you so much, tim .oh, european consumer reporter bayer shares up 7.5% right now. more broadly, we have u.k. markets close, u.s. stock and bond cash markets close as well. green on the screen for years on equities and futures. this is bloomberg. ♪ staying connected your way is easier than ever.

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china warns the u.s. that it risks further worsening relations between the two countries, but european stocks shake off the tensions and start the week higher. bayer settles. bloomberg learns the chemicals giant has reached deals on a substantial number of roundup lawsuits. the stock trades higher in frankfurt. and ire and fury -- boris johnson faces criticism from all sides after standing by his top aide, who broke lockdown rules. this is bloomberg "surveillance." i'm nejra cehic in london. happy bank holiday. for the u.s., let's get the first word news with leigh-ann gerrans. in hong kong, protesters gave their biggest demonstrations in months. against --d two gas was used against demonstrators in a shopping area. at least 180 people were