the u.s. risks worsening relations. germany's confidence boosts on a gradual rebound as businesses turn cautiously optimistic when the virus plunge the economy into a recession. and a bailout for lufthansa and one of the biggest in the history. i'm nejra cehic. happy memorial day for those of you in the u.s. markets closed in the u.s. and you kate for a bank holiday. we have liquidity and seem green in terms of cash and seeing green in terms of the indexes -- in terms of green and seeing green in the terms of indexes. this as a war of words increasing between the u.s. and

china. the dollar giving up gains it had overnight after two days of strength, also speaking to risk on, as does green on the screen for oil, up 75% this month. political turmoil intensifying in hong kong as china vows to crack down. d.he -- is rishad the do we know about tensions in hong kong? rishaad: the biggest rally in months. dramatic removed by china to cut down. police shooting water cannons and tear gas. they gathered to oppose the new

-- the new security measure from china. at least 180 people were arrested. it will not stop there because there are similar demonstrations planned for later this week. anyoned punish disrespects china's national anthem. the npc to try to get the legislation through this week. punishes any act that really threatens national security for china as a whole. on thevague details legislation. as thetill being seen biggest invasion of hong kong autonomy.

it is heightening the tensions between beijing and washington. several pro-democracy legislators have come out saying this could be the end of hong kong as we know it. the china foreign ministry office says a new security law for the city will only impact a small number of resident and for everyone else, "there is absolutely no need to panic." to assuretrying investors they would not be affected. it is the backdrop of the course of strengthening government rhetoric coming from beijing. pro-democracy leaders fear it will limit their rights. interesting that you highlight china's attempt to

downplay the impact on hong kong of this legislation because certainly what china doesn't seem to have downplayed over the weekend, looking at the comments from the foreign minister, is the increasing tensions with the u.s. what have we heard on the escalation of the war of words? mentioned -- we did mentioned earlier that the foreign minister said it was increasing tensions near a cold war. more importantly, not harming the interest of the people in the u.s. you have businesses involved.

you have the u.s. department of commerce on saturday expanding , adding 33ties lists countries and entities. it is not really what they are doing in the specifics, but the generic message sent. that is more important here, because it perhaps signals the intention of the united states to politicize this and curb china's tech and reinforce the long arm jurisdiction. , chinaame time came up with its own list of entities and that is after they put curbs on huawei come with a double down on. entitiesd that list of

has never been revealed and they pointed to a source in the chinese government that said apple.s. companies like and qualcomm could be in their sites, i suppose. bloomberg's rishaad salamat , great to have you. up, the increasing tensions on china. we are joined by a ceo, coming up next. this is bloomberg. ♪

nejra: i'm nejra cehic in london. u.s. markets are closed. in the u.k., it is a bank holiday. other stocks in the green. global equities remaining 30% higher than the march lows andred by stimulus measures swift response on the virus. joining me is lothar mentel . think you for joining us.

we seeing green on the screen today. do you get the sense that for the moment investors are william -- willing to shrug off the tensions between the u.s. and china? so,ar: yes, it would seem but it makes us nervous because we are quite optimistic and positive about china and the trade tensions perhaps being put on hold. the latest action by china might really hamper that. there are some clouds on the horizon. nejra: and if you add to that the fact that we've got the easing of lockdowns around the world. do you see that as something markets will continue to run with is a positive story of reopening of economies or are we downng ourselves up for a when the second wave hits?

lothar: the jury is out on that. we will have to see how the infection levels continue. at the moment, it has been lowering. rates have remained lower and positives in the market view from that. there is the risk that if infections rise or the prospect of a vaccine slipping further into the winter, that markets might catch a cold again over that. it has been optimistic at the moment. nejra: absolutely. you point out that any sort of relaxes of infections and fatality rates could cause the market uptick. ciought up with the global of ubs wealth management. it was interesting because they have done work where they

question the relationship between lockdowns and slowing virus transmission, which leads them to come to the conclusion that rather than perhaps getting a second wave, we get a second wind in terms of a market rally. what do you make of that view? lothar: it is quite possible. we just don't know at the moment how this virus is really spreading through the population and how it is affecting those who are vulnerable. we may well have seen most of those who are vulnerable to the threat already had it and for a while we would have quietness. there is every reason to be both optimistic but also every reason to be pessimistic. i am happy the markets have currently chosen to take the optimistic view. i am a more optimistic individual, so i think with the

summer coming and social and physical distancing being easier outdoors, hopefully we will see this virus being under control, at least until there is more and better news about vaccines becoming available. nejra: what positions are you taking in the portfolio around equity markets to affect your view? slightlye are overweight and have been since april. reviving is on autonomic activity in china, which was quite disturbed by the foray into bringing hong kong closer on the -- under chinese control. that is not good news because that could change that optimistic view about growth and economic activity reviving from the asian side.

if they play that wrong, it could go quite wrong for them. thatalso makes us hopeful this is a balanced play between political needs domestically in the china and the u.s., both sides are also very much dependent on things not derailing. china does want hong kong tooth -- hong kong to thrive. the u.s. does not want to have another trade war in order to be a good rebound of the economy as we come out of lockdowns. there are lots of interests involved that make us hopeful that they will not let this escalate and will not become a second sort of crimea crisis as we had a couple years ago with russia. nejra: so if you're overweight equities, but you are concerned about the rhetoric coming out of the u.s. and china, what does that mean in terms of protection

? do you just wait and see or perhaps take a more cautious stance towards emerging markets. do you add protection in the form of gold or treasuries or put options on u.s. equities? what is the strategy? lothar: it is a watch and wait. we have to wait and see how both sides are having actions follow the rhetoric. the rhetoric isn't helpful, but actions have not been there. we are keeping our position at the moment, but reviewing it on a daily basis, whether we want to be overweight china or not. it has done well for our portfolios over the past eight weeks, but we are mindful that things could change. we wouldn't really want to be putting money into treasuries or that with the central banks with

the markets wanting to go up rather than down and you wouldn't want to be short risk assets at the moment. china, of so with course what stole the show are the npc on friday was what we heard about the hong kong security law. we did get pronouncements about the economy in terms of the abandonment of the growth target for 2020 and signals for future stimulus. what expectations do you have around the stimulus for china and would it be enough to offset any escalation in u.s.-china tensions? lothar: i think china definitely needs to do a lot more. what that tells us is the chinese economy is hurting, unemployment is high, and chinese leadership will be keen to improve that situation, and therefore, more stimulus is needed.

we have not seen much support from the chinese central bank as we have seen elsewhere. we do expect more to be forthcoming from china, china always has the risk in the last round of big physicals and monetary easing -- fiscal and monetary easing, that the market takeoff again and problems later. they are balancing that, to our they need to pick up their stimulation -- stimulus measure if they want to come out of the communist party's hundred earth day in a years time. you saidst briefly, you don't want to add treasury -- 100 earth day in a year's time. nejra: just briefly, you said you don't want to add treasury, what is the equity? multi-assetun

portfolios so we are not tied within credit. if we want to pick up more corporate exposure and rebound, we will and we have overweight in equities and that is the way we can play it because we are playing fixed income portfolios. you have to be selective and there will be defaults and they will not be entirely preventable, so credit is a difficult game to play and we are more happy to play the corporate rebound in the equity markets. lothar mentel stays with us. bailout, what a could be one of the biggest bailout injury nice history -- in germany's history. this is bloomberg. ♪

nejra: this is a special edition of "bloomberg markets." here is your "bloomberg business flash." a shakeup on the way with aston martin. the new chief executive be the head of the mercedes performance division. they are struggling with debt. a billionaire investor became the executive chairman. bayer has reached verbal agreements to solve a substantial portion of lawsuits involving the weedkiller roundup. the deal covers as many as 85 thousand of the estimated 125,000 cases as part of the $10 legaln plan and the battle inherited when they bought monsanto.

in air travel from the coronavirus. z said that pandemic devastated it revenue. global revenue plunged. that is your "bloomberg business flash." nejra: thank you so much. the german government said to making a formal offer to lufthansa. they have been negotiating a 9.8 l.a. dollar rescue package. joining the is our bloomberg germany reporter. agreement isat the extremely difficult, because the german government is ready to step in with three times the market cap with lufthansa.

there has been haggling over how much influence should the german government half in the running of the company. they have settled. they would take a 20% stake in shares. -- stake in they would potentially have veto power in the government and they would also get two seats in the supervisory board. nejra: interesting. we understand a key committee is to meet later monday, today, to formalize the rescue package. you talk about a delicate situation pay what are the stumbling bought? -- stumbling blocks? outstandingow still is basically the approval from the eu commission. basically, the commission

will ask for further concessions it is that slots and lufthansa is running out of cash and needs the money soon. it inanted to get principle with the eu commission so that it can be speeded up. nejra: so in terms of some of the details, run us through executive a lot package will look like -- through exactly what the bailout package would look like. the overall package is $9.8 billion. $4re is approximately billion in the silent partner.

it is a huge package and it goes beyond just liquidity, it is stepping up capital to make lufthansa strong enough to survive over the next month and so on. the aim is to safeguard the company as a national entity. nejra: a european champion that could look for say two years down the line. what about opposition from rivals? birgit: rivals istion from largely coming from ryanair. the approval process. ryanair said they have to get out of the crisis without aid. they are demanding that the commission take a tough line against lufthansa and their presence in germany.

they will have a close look at with the commission will decide. nejra: right to have us with you. .- great to have you with us staying with germany, the largest economy betting on a rebound. we have a conversation next. quite a bit of a green on the screen. closed. u.s. markets optimism coming through in the dollar giving up some of the strength from overnight in the asian section. oil on the forefront as well. this is bloomberg. ♪ staying connected your way is easier than ever.

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this is a special edition of "bloomberg markets." we saw gains in asia overnight. u.s. futures trading higher. some risk on sentiment, despite the fact we have seen escalation of a war of words between the u.s. and china over the weekend. the dollar giving up some of the gains from overnight, and oil extending gains after a four-week rally that has seen the oil price gain 75% this month. let's get back to europe because we got e foe data today -- we got ifo data today. the coronavirus pandemic plunged the economy into a recession. i spoke with the president of the ifo institute earlier today. >> what we see here is the impact of the easing of the lockdown. more companies say our current , ifation has improved

slightly worse than a month ago, but we think there is hope for the future. there is, so to speak, light at the end of the tunnel, simply because these restrictions are now being lifted, and that is a good sign. there's a lot of caution here, in manufacturing in particular. companies say the current situation is really 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 shops is limited. at least they see some progress. so there is a lot of caution here, but at least the mood isn't as catastrophic as four weeks ago. nejra:nejra: i find it really interesting the distinction you have made between you may of hectoring that he made between manufacturing and trade and retail. i understand lockdowns are easing, but there's still, first

of all, quite a lot of restrictions in place, and what a palpable fear of a second wave and further lockdowns. clemens: i am not sure how strong the fear is regarding the second wave in germany. it is maybe being discussed less then in other places. at the same time, we have to see marketsufacturing, many , france, italy, spain are so closed, so companies really find it difficult to get started again, whereas in retail, the shops are open. they were shut down completely, which manufacturing was not. retail shops were shut down completely in april, and no opening up again. that explains the improvement in the mood. still, most companies continue to be pessimistic, but the pessimism isn't as strong as it was four weeks ago. nejra: so still pessimistic, but not quite as much as before. what does that mean for the shape of the recovery?

does it look possibly like a v, more like a u, or something else? clemens: to me, it doesn't really look like a v. i think there is going to be a quick recovery, but not to the old level. we will stay at a lower level. economists have talked about the , so at the lower level for a long time. i don't think it is really a u. there is some recovery, but it doesn't take us back to the older level. the economy will stay subdued for some time. nejra: what is your assessment of the german court ruling? that is one of the reasons some think the ecb might move more quickly and expand the pepp, and strike while the iron is hot, if you like. i think the ruling is complex. it will restrain the ecb in the medium-term. it doesn't apply for current

to the currented measures, but it is a warning to not be too aggressive about its bond buying. but the ruling raises more fundamental questions about the overall institutional architecture of the union, so i believe this does include a number of risks. ,s far as the ecb is considered i think it will force the ecb to be more cautious about bond buying. i don't think there is a strong impact on the current measures, but if we think six months ahead or a year ahead, i think the ecb will have to be up at more cautious. -- to be a bit more cautious. nejra: that was the president of the ifo institute speaking earlier. still with me is lothar mentel. let me pick up on what clemens was saying in terms of the german court ruling, perhaps forcing the ecb to be a little bit more cautious because some

red into the account of the april meeting that there were signals of more stimulus to come in june. do you expect expansion of bond buying, at least with regard to pepp, from the ecb in june? lothar: yes, we do expect expansion, and i think, as was said in that interview, it is a bit of a warning shot from the german court. i see it less of a warning shot to the ecb, more to the politicians, to say sort out the shortcomings of the monetary tune in of which you were aware for a long time. that initiative last week by macronand mi -- and toward issuing common bonds has to be seen as going towards sorting out these issues that exist.rt says

nejra: maybe a bit controversial talk about common bonds because we have been told that there is a workaround for that. we've had a joint paper from the leaders of austria, denmark, sweden, the netherlands, that sort of suggest they may be open to concessions. signals include the possibility of grants, but they have called for a time limit. how optimistic are you about this recovery fund coming through in a meaningful enough weight to support the euros in meeting to support the eurozone recovery? is reallythink it positive that things are starting to move in the direction of some sort of common bond, or even just solidarity across the eurozone because without that, i would be very concerned that eventually, the just startectorates

to say, what is the point of this e.u. thing if it doesn't stick together when times are tough. so all of those should be welcomed at the moment, but perhaps we shouldn't have too high an expectation that they will deliver everything we are wishing for. thea: that combined with fact that you expect more stimulus from the ecb, what does that mean for your strategy and europe? does it mean that you are perhaps positive on eurozone equities or parts of the fixed income market? lothar: we are fully invested to our benchmark rates in europe, but we are, as we discussed focusing or monitoring very carefully what might come of global trade if china really continues its hard stance on hong kong because europe is much more than the u.s. dependent on the global trade recovering. if that doesn't happen, if we've got another bout of trade war

going on between the u.s. and china, then as usual, europe by the brought into that u.s. saying you can either trade with us or with china, and that would create quite considerable headwinds. so we have to be mindful of that and monitor that very closely. that would also potential he undermine our position with europe, which is for the time being positive, even though it is going through a really tough .ime at the moment the not so terrible economic readings are actually seen as quite positive. that is my thought. nejra: i wonder how positive you are on sterling. i spoke to kit juckes of socgen earlier. his views on sterling pretty clear. slow progress on brexit, refusal to count in an extension, all negatives for sterling.

do you agree? lothar: i'm afraid so. it is not great for sterling. but i think a lot of that is at the moment priced in. i am not necessarily seeing it deteriorate, but i was not optimistic and the shorter term. the u.k. seems to be a little bit behind the curve compared to continental europe on the policy side. havelatest initiative to everybody quarantined for two weeks that wants to come to the u.k. is not going to help bring the u.k. economy back to where it was, and then there's always brexit. nejra: absolutely. then you get the controversy about boris johnson's reaction to dominic cummings supposedly breaking the rules over lockdown. i know it is not necessarily an easy question to answer, but

would you change your view on becomeg at all, perhaps more positive on it in any way, if dominic cummings were to leave his post, given his views on brexit? lothar: no, i don't think that would necessarily change our view. if anything, you can think about dominic cummings whatever you like, but he's been one of the driving forces behind the effectiveness of the u.k. government. without him, there is a risk, even if i am not a great fan of him personally, but it would be a risk to the u.k. government the coming less effective if he wasn't there anymore. nejra: interesting. ok. lothar mentel, tatton investment management, great to have you with us. let's get the bird first word news with leigh-ann gerrans. leigh-ann: and hong kong, protesters vowing more demonstrations this week.

police used tear gas and a water cannon i can stem in a shopping area. at least 180 people were arrested. china insists legislation will not change hong kong's legal system. the entryill prohibit of noncitizens arriving from brazil. the country now has the second-highest number of coronavirus cases in the world. restrictions don't apply to the flow of commerce between brazil and the u.s. in the u.k., lawmakers are publicly attacking prime minister boris johnson's top aide dominic coming -- aide dominic cummings, who broke lockdown rules to seek care for his four-year-old child. johnson called his actions defensible. global news 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries.

i'm leigh-ann gerrans. this is bloomberg. nejra: thank you so much. $33,g up, oil edging past while improving supply fundamentals continue to offset growth fears and china. more on the powerful rally, next. this is bloomberg. ♪

♪ -- leigh-ann: this is a special edition of "bloomberg markets." boston fed president eric main streetpects

loans to start going out into weeks. up to $600rovide billion of credit to small and medium-sized companies. -- has seen five straight weeks of increasing demand. hotels are operating at about 50% of occupancy levels. ramada's brand includes and super eight. a round of bidding for virgin capital. collapsed after losses and a plunging global travel demand. that is your bloomberg business flash. nejra: thank you so much. barrelrading near $33 a as escalating tensions between the u.s. and china at caution over the prospects for a global demand recovery.

international energy agency head fatih birol says he sees more upside for demand. joining me for more is bloomberg's annmarie hordern. great to have you with us. let's kick off with his comments. we might not be seeing a big move today, but we have seen a 75% rally in oil this month. what makes fatty be real -- what makes fought to be role -- what optimistic?birol so annmarie: it has been a huge stabilization for the oil market. this is a discussion i've had with traders, and even bernard .ooney, the ceo of bp, said it is saying weol haven't reached peak oil demand yet. more people working from home, less business travel. would 2019 be the last time in the world that we used 100

million barrels a day? fatih birol says no. he thinks we can take demand back to where it was and beyond, so the iea sticking with the demand that we see -- sticking with the view that we see demand increase over the next decade. this has definitely been a debate behind the scenes, and even out in front, when you have the bp ceo questioning have we hit peak demand due to the pandemic. nejra: what is the debate behind the scenes in terms of how much further this powerful rally we have seen this month has to go? annmarie: right now the story is really about demand pickup in asia, and most notably in china. don't think many people were expecting levels we have seen. oil that had seen this twin supply shock and demand shock,

that demand pickup in china, one of the biggest consumers in the world, is huge. couple that with the fact that we are seeing ratcheting back of production on the supply side. involuntary when you look at the likes of the united states and norway, but also, those voluntary cuts from opec+, and even ones like saudi arabia going further and cutting deeper, all of that is stabilizing the markets. the question remains, winner we going to see it improve outside of china? europe is still behind, the united states is still behind. we are seeing demand out of china, but is that enough to buoy the global consumption? nejra:nejra: we have discussed demand a lot. you mentioned the supply side as well. i know what gave a lift to prices recently with the fact that we were seeing drawdowns in cushing particularly. but if we look further out, can

we expect a quick rebound in orply from shale explorers, is the sudden rebound in oil going to expose the achilles' heel of shale? annmarie: this is what shale is all about. the second we have higher oil prices, they are going to be able to start drilling again. we had a record drawdown in cushing. that certainly helped pick up on prices, and just the fact that we had tons of shut-ins in the united states, that on the supply side has certainly helped. the question is, who will come enoughen there is a good shale producers to open back up shop? drilling activity in the u.s. is really at an all-time low. slashers have had to spending to survive this crash. it will be interesting to see survives on the other end. nejra: thank you so much.

of bayer, shares rising after the company is said to reach a verbal agreement over cancer litigation regarding its wound up -- regarding its roundup weed killer. this is bloomberg. ♪

nejra: live from london, i'm nejra cehic. this is a special edition of "bloomberg markets." according to bloomberg sources, bayer reached a verbal agreement to settle a significant proportion of its u.s. cancer lawsuits. the deal is a part of bayer's plan to end a costly legal battle over the use of its roundup weed killer. joining me on the foam is tim loh, bloomberg european consumer reporter. congratulations on the scoop. what did you find out?

tim: thank you. we found out that bayer, which has been in months long the plethorawith of plaintiff attorneys in the u.s., that they have made lots of progress, and even have some verbal agreements on somewhere casesn 50,000 and 85,000 of roundup. that comes against a backdrop of sore being 125,000 or lawsuits that they have to deal with. all of that is new stuff that we came out with today. nejra: interesting. insignificant as well, and terms of the number -- and significant as well, in terms of the number. tim: bayer has, until now, disclosed the number of cases that have been officially filed in the u.s., so as of april,

they were saying they were contending with 52,500 roundup cases. we knew for months beforehand that there was probably tens of thousands of additional cases that are pretty much ready to go. they just haven't been formally filed in the u.s. legal system. but it was difficult to know how many tens of thousands that was. we are hearing from our sources that the phone number is around 125,000. that gives you a picture of the whole universe of what these negotiations have been about. nejra: absolutely. shares are up more than 8% today. it is one of the best performers on the stoxx 600. how much more support can the share price get from here, given some of the questions over bayer's wider strategy going forward? tim: you definitely see some optimism today.

i think you will see, if they are able to pull this off formally, most people expect there to be quite a bit more of a spike in the shares. this kind ofinto debate that has been postponed for a long time because of the roundup situation, and that debate is whether it even makes sense for bayer to be a pharmaceutical and agricultural company, which they really doubled down on with the takeover of monsanto. they would rather diversify their investments on their own and not let companies they do the diversifying. it really hasn't been possible whilee that conversation

there are so many legal clouds from roundup. nejra: bloomberg's tim loh, great to have you with us. coming up in the next hour, jp morgan's asset management global market strategist will join the show. we've got quite a strong risk on day in terms of european equities and u.s. futures. bear in mind that trading with u.s. markets are closed. oil is on the front foot as well, and we keep our eye on k develop its. the bbc reporting that dominic cummings is expected to give a public statement. this is bloomberg. ♪

♪

>> china warns the u.s. that it risks worsening relations from the two countries. the german government reportedly agreeing to a bailout for struggling airlines. u.k. prime minister boris johnson under fire for defending his top aide who broke lockdown rules. politicians in his own party say dominic cummings must go. welcome to this special edition of "bloomberg markets" on monday, may 25. i'm annmarie hordern. 8:00 on the east coast here in new york, 1:00 p.m. in london if you are off for the spring bank holiday. let's get a check on the markets this morning. it is a risk on day. markets continue shrugging off geopolitical tensions and the war of words between beijing and washington. 1.6% thisup nearly morning.

we will hear more. u.s. dollar a little firmer 107.68.the yen, birol says we have not reached peak oil demand. for more on the corporate market, a lot of news today, even though it is a quiet day. there has been volume. deutsche lufthansa up 6%. tpa reporting that the german government agreed to this aid package -- [indiscernible] bayer this morning up more than 7%. they had said to reach a number of verbal agreements to resolve these lawsuits, 125 thousand of these roundup lawsuits, something that has painted a gloomy picture and cloud around bayer since they acquired monsanto. vw under pressure in germany, down 0.5%. a top court has ruled that the

maneuvers -- ruled that owners of manipulated cars are entitled to damages, so more pressure on vw. joining me now is vincent juvyns , jp morgan global market strategist. friday withure on the souring rhetoric between china and the u.s., which is only bound to get more hostile as we head into the u.s. election in november. does this change your outlook, and possibly positioning, when you look at china in your assets? vincent: no, we have been quite positive on u.s. and chinese assets for many months. this does not change the equation. clearly,ier -- but china remains in the market, and we do see opportunities.

it is true on the equity side and more and more on the fixed income side. geopolitical tension, we need to focus on the learning term -- on the long-term, and the long-term is positive from our perspective. annmarie: i want to ask you about hong kong's special trading status. this is something we saw mike pompeo possibly say could be taken away. what happens to those assets in hong kong if that trading status was to be taken off, and really the clout of hong kong? vincent: it is difficult to forecast, but i believe that kong,needs a strong hong and the other way around is true as well.

i would expect that escalation will be limited in the foreseeable future. so a strong hong kong is important for china. let's hope that we don't see any escalation. we already have enough .ncertainties annmarie:annmarie: what does it do for the trade deal inked in january? there's a lot of deja vu in the market that we could go back to that concern leading up to january, the end of 2019. we saw markets really under pressure from that sentiment. many thought that the big part of it, china and their purchasing of u.s. goods, they were never going to make it up. arewith the pandemic, they really behind the pace needed for 2020. do you think this hurts the trade deal at all? vincent: clearly, i believe the pandemic is to blame for the

fact that china hasn't really fulfilled its commitment in this area. on the other side, we see that chinaay-to-day basis, continues to deliver in opening markets, and jp morgan is one of the many examples. jp morgan has been able to take its joint venture in china up to 100 persons. we have seen and more global business, business is getting more access to chinese markets, which shows also that china continues to deliver its promise to open up. believe in the context of the trade deal, it will probably be in theed, but it's interest of china and the u.s. to have a good trade deal between the two countries. it would be mutually harmful at the same time to see escalation

of trade tensions. so this is not the base case at the moment. annmarie: i want to move on to europe. you are sitting in brussels. it is going to be a really big week for europe. acron-merkel plan. there's a handful of european countries that are going to prove to be a hurdle. do you think they will get on board? will we see this relief aid come to europe? vincent: i think so. i hope so. obviously, this is common sense. we need to cope with this crisis, but more so with future crisis. we need a stronger euro. we need a more integrated europe. it is very important. i am happy to see that germany this, andsupporting

these announcements were a step in the right direction, and could be a game changer for europe. forsupport i see in germany relief proposed by emmanuel isron and angela merkel quite interesting because i think it is a step in the direction of giving much more financial support to the european commission, giving it the ability to really meet its own financial needs through the financial market. it will also increase solidarity in europe because those providing funds won't be necessarily those benefiting. so i suppose that before making the announcement last week, there was already some discussion with the so-called frugal countries in europe, and there won't be too much blockage on thursday. i would expect probably some conditions to be made.

obviously, no conditionality has been discussed yet. this could be eventually agreed on thursday to make this more acceptable for the so-called frugal countries, denmark and so on. annmarie: if this fails, what happens to european assets? vincent: i guess that is the story of the european project. investors are used to seeing this european project moving very slowly, struggling at some points. still, it would be obviously a very negative signal that europe would give to itself, but more importantly, to the world about its capacity to reinvent itself in light of this new crisis. say that europe will definitely be able to find an agreement on thursday. in my mind, if they failed to

agree on the seven your budget and this relief and to support the countries which are the most infected in europe at the moment due to the abandonment -- due to the pandemic. annmarie: we will see the pepp being extended. is the periphery a better short-term bet in your mind right now? vincent: i think over the last 10 years, it has been very rewarding. i don't know what is going to happen on thursday. i hope that politicians will find a solution to the issue that europe is facing at the moment, but in the meantime, the ecb is still doing the job. it is still providing short-term, midterm, long-term relief for the periphery in the form of low financing costs. short-term, that the periphery is one of those

you see on the fixed income side a relatively decent yield. annmarie: vincent juvyns, jp morgan asset management chief market strategist, thank you for joining us from brussels. coming up, oaktree capital's howard marks says support from the fed is only temporary, and stress is coming for developed markets. that's next. this is bloomberg. ♪

annmarie: welcome back to this special edition of "bloomberg markets." i'm annmarie hordern. u.s. and u.k. equity markets are closed. howard marks, the chairman of

oaktree capital, says the fed has great power, but it's ammunition is not limitless. he spoke to my colleague, bloomberg's erik schatzker, about how the fed's bond buying program has affected the markets. there's a divide between the people who think that stocks are fully to highly price today, given the economic outlook, and there are people who think that is ok because the fed will make sure that the whole economy and all of the markets levitate, and in many ways, that is the more important divide today. we all think that life will go on. there will be a return some part of the way towards normalcy. there will be a vaccine, and so forth. is the peoplevide

who don't understand why stocks are where they are, and the people who do understand it by in terrorizing the old motto, you can't find the -- you can't fight to the fed, i think that is an even bigger divide today. >> what do you think. can he fight the fed? >> i think the fed has great power, but not forever. first of all, jay powell talked will not have the ability to run out of ammunition. i don't know if the fed's ammunition is really limitless. i know that the fed can cause and stay up as long as it buys, but i don't know if it can buy forever. we are in new territory here.

the fed has never bought corporate securities. this time around, they included corporate securities, and then noninvestment grade corporate securities. buying can make these asngs rise, but only as long it is buying. ofhave seen a kind of colin -- kind of column of water, and then a ball sitting on top of the water. as long as the water is forced up, the ball stays there. the water stops, the ball falls down to earth. thatusly, the fed hopes it will inject confidence and that they will take over in buying, but that remains to be seen, and it remains to be seen whether that buying will be at today's levels. expecthere any reason to that is going to happen? that followed the

financial crisis, every time the fed tried to pull liquidity out of the market, it seems, investors rebelled. there was the taper tantrum. there was the fourth quarter of 2018, and other instances. are you suggesting that the moment the fed tries to withdraw liquidity from the market that it really prices itself on solvency more than anything else , and that the same thing is going to happen? >> i think it has to happen, to some extent. this is a dilemma. can the fed keep it up forever? if it doesn't keep it up forever , will prices weaken? those of us in the markets believe that stocks and bonds as well are selling at prices that

they wouldn't sell at if the fed were not the dominant force, at prices that would be determined by just the outlook for the companies. one, if the fed were to reseed, we would all take over de, we would all take over as buyers, but not at the same levels. i believe there's too much concern with the downside of withdrawing the support and not enough concern with the downside of never withdrawing support. i think if it had been done gradually, it could have been done. as you say, there was a bit of a temper tantrum in the fourth quarter of 2018, when the

interest rate on the 10 year 3.2 5%, and the market started to go down from there. like candy, and investors like low rates, but we have to have discipline also. annmarie: that was the oaktree capital cofounder and cochairman speaking to erik schatzker. coming up, u.k. prime minister boris johnson's scramble to save his top aide. the bbc reporting he will make a public statement this afternoon. more on that. this is bloomberg. ♪

annmarie: this is a special edition -- leigh-ann: this is a special edition of "bloomberg markets."

i'm leigh-ann gerrans with your bird business flash. it -- you're bloomberg business flash. germany looking at a bailout for lufthansa. one sticking point had been a timetable for when the government would sell an eventual stake in lufthansa. a shakeup at aston martin. the british sports carmaker is set to replace its ceo. the new chief executive will be the head of the mercedes performance division. aston martin is struggling with debt. less than two months ago, a billionaire investor became the company's executive chairman. bayer has reached verbal agreements to resolve a substantial portion of u.s. cancer lawsuits involving the weedkiller roundup. bloomberg has learned the deal covers as many as 85,000 of the 125,000 cases.

bayer plans to end the legal battles acquired when it bought monsanto. that is your bloomberg business flash. leigh-ann.hanks, u.k. prime minister boris johnson facing his most serious political crisis since his election last year. claims that his aid dominic cummings broke lockdown rules. >> i do not mark him down for that. respect, that in every he has acted responsibly and legally and with integrity. cummings is not reportedly set to give a statement and answer questions this afternoon. joining us is bloomberg's sebastian salek.

is there any sign of the government backing down? i looked at the british press this morning. even the normally tory favored "daily mail" was saying, what on planet earth are these ministers are these from? there's lots of criticism from their own party about dominic cummings having to go. do you think the government will give in? sebastian: you have seen "the " standing with "the guardian" and other newspapers. i think at the beginning, they thought this was going to be a bubble store that would not make it out of that elite circle. days later, we are still talking about it, and we are expecting that statement this afternoon. that alone is unprecedented, a government advisor speaking for themselves. there is a risk that it could be even worse. there's a lot of anger out there. you mentioned tory mp's.

around 20 of those lawmakers from johnson's own party are now turning against cummings. a lot of cap members are reportedly angry. they were told to tweet out members of -- they were told to tweet out as it is of support, and that was before the situation got even worse, so they have been made to look silly. andy behavioral economist for the government who advised the strategy on lockdown, and they said that all of their advice is now being trashed. there's a lot of angry people for boris johnson to contend with, and there is that risk that other people are going to follow suit. annmarie: i saw the media images coming outside his home. the british public is angry. he is a controversial figure, but he is also indispensable to boris johnson. why? why is dominic cummings so

important? sebastian: this is the guy who has been alongside boris johnson since the brexit campaign. ,e masterminded the vote effort -- devote leave effort, and he is the ideologue behind boris johnson. he's been known to waiver. he's very different now to how he was when he was mayor of london, for example. but dominic cummings gives that vision and government, and it is a sign of just how important he is that boris johnson, given all of the pushback he is getting from the media and politicians, is standing by him now. he is a populist usually, and now going against the tide of what people want, and that is what is really notable about this. looking ahead to that statement, we will expect some sort of explanation from dominic cummings, but we really are looking to see at what point

this starts to look seriously toenable and could continue undermine the government in what is already a very tricky time. annmarie: also, usually a bank holiday, we don't get this kind of news. now we have an unprecedented press conference from a chief aide. thank you so much to bloomberg's sebastian salek for joining us from london. coming up, more from our conversation with brian moynahan, bank of america ceo come on when he expects recovery in the united states. this is bloomberg. ♪

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we've always believed in the power of working together. that's why, when every connection counts... you can count on us. annmarie: welcome back to a special edition of "bloomberg markets."

today is memorial day in the u.s. markets are closed in the you can the u.s.. thin trading. stocks up 1% this morning. one of the biggest gainers this morning, bayer. the dax up more than 2%. survey out,i post cautious optimism in may. the u.s. dollar a little stronger against the yen. demand will be back -- this is a debate in the oil market. will we ever see 100 million barrels of oil and ken? -- oil in the market. at 7%, epa, the german news agency saying that lufthansa and the german

government agreed to this aid package. delicate situation. talks with the european union have held up the plan. 8.6 percent. they will resolve cancer lawsuits. this is put pressure on bayer since they bought monsanto. and also a ruling that owners of any vw cars are entitled to damages. here's a look of the markets. we are seeing very thin volume. a timeline for the headlines outside the business world. leanne is here. good morning. good morning. in hong kong, the biggest rally in months after china -- they

cannons gas and water against him and straighter spirit at least 180 people arrested. legislationhe new would not change hong kong's legal system. in the u k, oxford university has were hurriedly run into a hurdle developing a coronavirus vaccine. --e telegraph" the decline says the decline in the infection rate has made it it isult to prove whether an effective vaccine. and the u.s. will prohibit entry -- noncitizens from brazil. they have the second highest number of cases in the world. the restrictions do not apply to commerce between the u.s. and brazil. global news 24 hours a day, hard by journalists and analysts in

more than 120 countries. annmarie. annmarie: thanks. brian moynihan spoke to david westin and when he expects -- u.s. when he expects markets to recover. this is a health care crisis. as we see that mitigated the economy starts to recover, but customerach has been a -- customer centric, community center, employee centric move. we are joined to make sure they have the credit capital to do it they need to do and help them through this trough of activity in the second quarter. loansn see that with the and other things we have done. clientshelped consumer

with waivers. we help their teammates by saying no layoffs, so they know that there are job is secure and getting them safe working from home and we have helped with , 700 million is already out. all of that is offsetting the impact of the second quarter. you see that with the unemployment numbers. we don't see this differently. we are just seeing it come out the other side, frankly. david: the federal reserve has expressed concern that there may that do not come out of the pandemic. commercial real estate. it are you seeing sectors that are particularly vulnerable? bean: the u.s. economy will particularly sensitive to the

consumer base. the bank of america research team is the best of the world, 5%ng -5% this year, plus next year. the real question will be how consumers behave. since we have seen the low point in the first couple months of april, in terms of their spending, their borrowing that fallyou saw all to its lowest level. you are seeing their activities pick up in states and you are seeing that pick up much quicker in places they are going back to work. for the month of may we are seeing it down 2%, 3%, 4% from last year. year-to-date, it's down a couple percent. the the real question. how will consumers behave, given

the high levels of unemployment. the stimulus payments hitting the streets and how it all fits together. i want to see governor jared polis and others -- the real question is how do we see consumer behavior over the next few quarters? polis -- r jared powell and the others. david: d think that that will be enough? -- do you think that will be enough? if you look at the interesting statistics, 35%, 45 percent of those who asked for a credit card referral went ahead and made the payment. they decided the issue of where the money is coming from, you are seeing a higher count. stimulus --use the

these measures have worked to offset the unfortunate aspects are very high unemployment. so far you're not seeing the delinquencies and things rise. you are seeing easy payment deferrals. we expect to see charge-offs coming. we are not seeing the kind of credit damage we expect to see. you said that china may give us some indication. we have seen numbers come out of china, brian. industrial production is coming back quickly. consumer, not so much, retail sales. does that give you concern back in the united states? brian: well, it does.

the question is how to change behavior. you saw this in china. earlier.ed down we are back in our offices in china moving people from 50% out 80% -- moving people from 50% to 80%. that is what we have to watch in the united states. there will be a burst of activity in some places were people up and in our homes for 5, 6, 7, 8 weeks and will that sustain? that is where you need to look more fundamentally at things purchases and house purchases. for most people is the economy does not get back to its current size until next year. that's the definition of a recovery.

despite the very high unemployment, the stimulus is offsetting it and you'll have to see that play out over time. david: you talked about what you are doing in asia. when to expect them to come back? had peopleave always outside the standard office setting. there is a great debate. we will see that play out, but that is further out. we have been open every day. we have not shut down. our concerns to keep the teammates safe, everything else

has been functioning every day and we are reopening those slowly but surely. we have that very much under control. of 180,000.position go backthe option to slowly. with the temperature taken -- taking, we have the ability to so they do not, have high-level cases, moving around in putting pressure on the community. we have a top team working on reentry back to the office. it's not back to work -- it's back to the office. finally we will hear from jay powell today as part of the

cares act, a report on that. what would you like to hear ?hair powell say you will hear from secretary mnuchin and chair powell. people have to step back. program has money left. applications are coming in. loans are going up faster. we have done 320,000 of them as of this month. 90% of employees, 80% are under 10 employees. there is a small business getting the help they need. there's the next round of their , so it is not an unlimited resource. in theas that will help near-term are the states because pressure.ble budget

that will add a burden to the down.als having to shut in some respects, nonprofits and reform nonprofits especially. the idea is the stimulus has to benefits. they just have operating holes so they can get back and provide the services they provide. there's a lot of discussion .bout facilities and usage a lot of these facilities were put in place to stabilize nec toh-grade issuance will -- stabilize and high-grade issuance will have another record month. high-yield will have a strong month. if you are starting to see

converts and equity deals get done. the fact that there is -- i think what people get focused on, the , butty is having it there whether it is main street, other facilities, the debate should be about whether it is being used or not being used. you should see that in the funding structures. annmarie: that was brian moynihan, bank of america chairman and ceo seeking to mcauley david westin. we will hear about better estimated data coming out of germany next.of this is bloomberg. ♪

leigh-ann: this is as special "bloomberg markets edition of." -- a special edition of "bloomberg markets." the rental car giant says the coronavirus devastated its revenue as the coronavirus took hold in the u.s. it's global revenue plunged 73%. jeff bellotti told cbs hotels at 50% ofotels are occupancy level. wyndham brands include days inn. and in australia, the alternative asset management for the airline. virgin australia collapsed in

.pril after years of losses that is your bloomberg business flash. annmarie: thanks. german businesses are counting on an improvement in the community in the second half plungede coronavirus the economy into a recession. from earlier today, professor clemens fuest. clemens: we see the easing of the locked down mostly. situation has slightly improved. we think that there is hope for the future. there is light at the end of the tunnel. restrictions are now being lifted and that is a good sign.

particular, the situation is really there. it's very positive. there are restrictions. they are at least seeing some progress. there is caution. but the mood is not as catastrophic as for weeks ago. i wonder what you are getting more positive feedback from trade and retail. i understand that lockdowns are easing. there is quite a palpable fear of a second locked down. clemens: i am not sure how strong the fear of a second wave is in germany.

at the same time, many market italy, are closed. the shops at least to are open, which manufacturing wasn't. now they are opening up again. i think that explains the improvement in the mood. companies continue to be pessimistic. still pessimistic but not quite as pessimistic as before. what does that mean? does this look like a v recovery or a u or something else? clemens: for me, it does not look like a v. we will recover but it will be

at a low over the dust lower level. it looks like we will stay at 90% or whatever. i do not think it is a u. it's a recovery, but it does not take us back to the old level. the economy will stay subdued for some time. some do think that they will , strike while the iron is hot, if you like. complex.the ruling is 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 eu and the overall institutional architecture of the unit -- union.

it is important to be cautious about bond buying. ahead ornk six months a year ahead, the ecb will have to be more complex. clemens fuest. still to come, more on why the global oil market will rebound. this is bloomberg. ♪

annmarie: welcome back to this special edition of "bloomberg markets." where is trading at $43 a barrel. an escalating war of words toween the us and china adds

concerns about the global recovery. joining us, will kennedy. thank you, will come up for joining us. i know that this is the spring break holiday. but what are your thoughts about this? peak oil not had demand is yet. you and i have spoken about this. the question is would we ever use 100 million barrels a day. what would you make of this, that consumption has not peaked yet? we have come out of the worst of the virus crisis. speculated that we have no peak and people will not be traveling to work as much, combined with the transition we havem fossil fuels

seen. iea does not take that for granted. and frankly we have seen people go back to work. they do not want to be on crowded subway trains. they want to be in the safety of their car. message theyeal , it isined to get across a bold policy. demand is picking up in china. what about the rest of the world? it is starting to pick up. think the way i would put

it, the last 5 million barrels will be harder. a lot of that will come back fast. this is all about the economy getting back and that will be tough. thank you for joining us on this bank holiday. coming up, my colleague and friend matt miller and stephen barrows, the head of ethics strategy. this is bloomberg. n barrow. ♪

matt: a new cold war. china warns the u.s. it risks worsening relations between the two countries. protests are roaring back in hong kong as china tightens its the city and lufthansa gets a break. and a package for the struggling airline. welcome to a special edition of "bloomberg markets." in berlin.ller to those of you in the u.s., happy memorial day. barrow, head of fx strategy, joins me. steve, there's certainly more risk on. we have gains across equity indexes in europe. we have dropped in safe haven assets like gold. why do you think the mood has shifted to risk on?

i think maybe a few different things. we had data from germany, another survey showing the collapse we have seen in the last month or two. it's a good sign. front, the data is consistent with the idea that april is the low point in the -- hit from coronavirus, assuming there's no significant second wave. this is something the market has known about and has obviously been pricing in. i think that that has been a factor for a little while. the tensions with china, the u.s. and china.

where they may have, from time to time, had risk off sentiment in the market, i think the coronavirus issue overshadows what is happening and i think broadly speaking a risk on environment is more likely to persist from here as we go through the worst of the economic downturn and even though those physical tensions between the u.s. and china will rumble on. do you see that tension between the u.s. and china playing out in the currency market? i do not see the standard on the trading bandwidth like on the renminbi or even on the yen?

that's true. it's been a good year or so of tensions between the u.s. and .hina yet through much of that, you would argue -- i would argue the effect has been relatively limited. used -- thet situation is relatively calm. if you look at other currencies ordinarily come under some sort of process -- pressure. australia is a good example. they continue to perform quite think it is almost ignoring these china issues even though the china issue as become to homesense closer

given the criticisms the australian government has been making. this has been coming from china. i think it continues to do that. matt: are those pairs more important than euro/yen? i tend --look at euro/10 to gauge euro/yen to gauge sentiment. to 113 and down change. it bounced back a little bit. is that still the most sensitive pair to watch when you're gauging risk sentiment for global markets? no, i would say the

australian dollar against the japanese yen, for me, is probably the most significant cross against the new zealand dollar. particularly the risk on/risk off scenario. i think that those two are likely to be the most sensitive, and that's obviously very, very stable at the moment. the yen to move against that, it's likely to persist. ,ithin the currency market perhaps you have the norwegian you look atl and the emerging markets, it's more

sensitive to that risk on/risk off sentiment. matt: there's a bit of drama in london as dominic cummings prepares to give a public statement or he should be at any moment getting up on stage to give a public statement. we see though real stability in the cable rates even as brexit talks to not seem to be going well. where do you see the pound right of dollar/pound or dollar? steve: it's relatively stable. --would describe it as being it's not coming along. with respect to brexit, it looks like something that may deteriorates. and it will be

quite crucial in this regard. there's probably a risk of the below 120.ping mark: the mark boal-mccrone agreement has been called as -- at least by one bloomberg opinion rider -- this is the moment for europe. this is the turning point. they will share of federal debt burden. is it that way? you'll see a lot of reaction in the euro-dollar. no.e: let's face it. something as massive as the

coronavirus has not shaken them. with respect to the eurozone, i would say it is to a large extent. what happens with the eurozone, the crisis, some of the moves tend to be broken. with the eurozone crisis, the debt crisis in 2010, the note bailout ruled was essentially broken. this time around, it is an issue of shared debt. -- itxt taboo in a sense is really what comes in time. not just the eurozone, but the with thentries

coronavirus, these things may be what the eurozone is doing at the moment. how theot reflected in euro is trading or the dollar is trading. we would still be lucky to escape without having a debt crisis at some point. all right. another one to calm. that's an interesting call. great to get some time with you, steve. row, standard bank, their top fx strategist joining us. coming up, negative rates have been a reality for years in europe and japan. the bank of england is not ruling about out. a former bank of england in anor will weigh in exclusive interview with bloomberg next. this is bloomberg. ♪

matt: welcome back to a special edition of "bloomberg markets." am matt miller in berlin. a very happy memorial day to those of you in u.s.. we are seeing gains across the 270 onehe dax gaining points. gold futures are down. safe haven assets losing a bit today as the risk on mood sweeps around the globe.

you can see the s&p futures up. the u.s. futures are up if you're looking at that market ahead of the open. -- bank of england governor and bloomberg columnist mervyn king discussed the efficacy of negative rates at we are seeing all over as the u.k. and other nations implement stimulus measures to combat the fallout from the epidemic. he spoke exclusively with francine lacqua and tom king. let's take a listen. i think that there has been too much made of the situation in terms of language like recession or depression or downturn and assume therefore that central banks have a responsibility of getting south of it. i think that's a mistake. this was not caused by the private sector being reluctant

to spend. this is caused by a government mandated shutdown of the economy and it does not make much sense shut downvernment to the government with one hand and pretend we need fiscal stimulus with the other hand you read we will have to work -- wait until the restrictions are lifted completely and then decide if stimulus, if any is needed. it's quite hard to see how we will be able to go back to anything close to normal until until thereccine or is population immunity. that is quite a long way away. , it's not going to be easy to persuade people to ,ake risks, going back to work to restaurants, theaters, and bars. the idea that a slightly lower interest rate will make them

more likely to spend in the near-term does not seem likely. this is for the medium term and not the immediate circumstances. i think andrew bailey hinted at that when he said, understandably, he's not ruling out negative rates, but he's not ruling them in either and it will take time to assess whether that is inappropriate step to take. be the effects a much more financial london versus the old structures of european banking? how will negative rates were ultra low negative rates be different for commercial banking in the u.k.?

mervyn: one of the reasons we did not introduce negative rates in the financial crisis is the damage it would have done to the banking system. what has happened in europe where they have gone to negative rates, in essence they are flooding the system with liquidity. they are almost subsidizing it keep it from failing. incredible to believe this is the long-term facing, to what we are moving to 0.1%. challenge is not central banks. inside central banks and outside. central banks are the only game in town.

-- thee is any reason reason that the economy is in such deep, deep trouble has nothing to do with the level of aggregate demand we were facing prior to covid-19. it has everything to do with the measures that governments believe they need to take. that does not mean that monetary going to solve our problems. matt: that was mervyn king, bloomberg columnist and former bank of england of your pure and you can check out his work by into the bloomberg terminal. still to come, protesters in hong kong and the effect on the city. this is bloomberg. ♪

leigh-ann: this is a special edition of "bloomberg markets." businessur bloomberg flash. lufthansa has an aid package. it is a $9.8 billion agreement with a timetable for when the government would sell a stake in lufthansa. bayer has reached a deal for

roundup cases. potential $10 billion price tag. this is a legal battle it inherited when it bought monsanto and 2018. this will be the biggest government back financing for the carmaker. up 90% last month. and that is your bloomberg business flash. matt? thank you very much. hong kong protesters had their biggest rally in months. bloomberg markets quote ticker desk: anchor rishaad salamat

joins us with an update. look how does this compared to protests we saw just six months ago. -- six months ago? rishaad: do not forget that we are living under covid restrictions. people did take to the streets and protesters were roaring back. the biggest rally in months. all of that a dramatic move by beijing. police deployed water cannon, tear gas. some of the demonstrators, as you mentioned, that is where the hong kong rule makers -- they said that they would punish anyone who disrespected china post the us national anthem. what is interesting is the

national congress was much delayed. they are expected to ram this punishesthis law that succession or subversion. with the judiciary here, it could remain independent. according to the commissioner of china, the top diplomat a few -- hong kong a busty of capitalist system or indeed a high degree of autonomy, it was changed with the legal system here. no matter what you say, this since biggest erosion

china to control of the british colony back in 1997. several pro-democracy states have said this is the end of hong kong as we know it. matt. rish, are there concerns that these protests will spur a surge in new coronavirus infections? or is the ironic -- i guess, the ironic twist of reversing the ban going to help combat that? i believe we have found here in hong kong just one in the lastincident six weeks of the advance. it does seem as though the chances of that happening are quite limited. but again, the picture is there, isn't it. the streets are populated by those wearing masks in relatively close proximity.

social not that much distancing. more of the concern might be how it affects u.s.-china relations, matt. rish, thank you for joining us on this big geopolitical story. rishaad salamat they are out of hong kong. isll ahead, jetblue extending is safe distancing program amid other measures to protect the flying public. more with our conversation with the ceo of that airline next. this is bloomberg. ♪ [ sigh ] not gonna happen.

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and a low step-in at three inches, which is 25 to 60% lower than some leading competitors. the bath fills and drains quickly, while the heated seat soothes your back, neck and shoulders. kohler is an expert in bathing, so you can count on a deep soaking experience. are you seeing this? the kohler walk-in bath comes with fully adjustable hydrotherapy jets and our exclusive bubblemassage. everything is installed in as little as a day by a kohler-certified installer. and it's made by kohler- america's leading plumbing brand. we need this bath. yes. yes you do. a kohler walk-in bath provides independence with peace of mind. mark: -- matt: welcome back to this special edition of "bloomberg markets." i'm matt miller in berlin.

let's look at the equity indexes. it's a public holiday in the u.k. and the u.s. today, but we do have big gains on the markets that are open, the dax and the cac right now with the german climbing 278ex points. continuing its strength throughout the day. we see that gold futures are futures are down, so we should see a positive start to trading in the u.s. as well. we also have a number of the big movers, big stories out of germany today. first off, germany is very close .o bailing out lufthansa it does want to take its time, the government does, too. it'ssi t's so thess its

bailout can get you -- eu approval. iser is going to settle roundup cases and a german court volkswagen have to pay damages. that is probably white volkswagen is not doing as well as others. big gains therefore bayer. an update on stories that are making headlines up for the business world. leigh-ann gerrans joins us with a first word update. good morning. president trump pressing to move the republican confident -- convention away from north carolina. they are set to meet in charlotte.

he wants the north carolina governor roy cooper to guarantee that attendance will be allowed despite the coronavirus. for brazils immigration. that does not apply to commerce between the u.s. and brazil. oxford has run into a hurdle in developing the coronavirus that scene. ratesine in a infection may make it difficult to determine whether the vaccine is successful. that's only a 15% chance coming up with a vaccine -- and also in the u.k., lawmakers are attacking boris johnson's top aide. he was supposedly self isolating with coronavirus symptoms.

said that this was defensible. powered by more than 2700 thisalists and analysts, is bloomberg first word news. i'm leigh-ann gerrans. matt: thank you for that. itslue is extending coronavirus measures passed the holiday. we spoke to robin hayes. off the bottom. one of the things i look at every day is the tsa data that shows how many will move through the checkpoints and it's an industry. seen morefinitely

improvements. we think in june there's going to be more demands. we are very cautious. 15% androbably between 70% of what we were flying, where as we were flying 80%, 90% down to what we were normally flying. traffic is it? robin: there's still a lot of essential workers flying around, medical personnel. whonitely people returning left the north east. it is a real mix. we are also seeing some small interest in vacation travelers as well. we are looking at the vacation

markets to better understand their plans. you see a lot of business traffic. do you see this coming back and anything like the way it came back before? robin: i think it will come back more slowly. we see this -- we are 80% leisure. 20% is nice. the international flights that we do have tend to be close to normal. i think there will be concern. i think we are going to see different quarantine wars that will confuse people. i think probably on business routes where we fly eight to 10 flying until be

business comes back. >> late 2021? robin: later 2021. we are committed. we think by late 2021, the demand between europe and the u.s. should be back to where it was. so, you know, we still see a .reat opportunity to come in and we have significant reductions. >> rich wrenching back to heathrow, with the likes of , doin, some of the stress you see this becoming available?

yes.: wider and brighter path now than i did then. >> you mentioned the legacy carriers. michael o'leary has been very outspoken. he does not see this as being a handed out. what is your perspective? robin: in the u.s., we have been very lucky. the u.s. administration acted very well. they received payroll assistance. other airlines, we do not have anyone on the payroll. that will last through the end of september. the reason for that is when the economy comes back here, the

.viation is so important you furloughed everyone and no airplanes,o fly the and the industry in the u.s. is very thankful for that and ready .o get things going again end oft runs until the september, what then? thato you reposition at point? we have always been very careful about how we plan to grow. we have a network that is domestic or tends caribbean america. we do believe this business will

come back first. having said that the think it is highly likely when we get to october we will be a smaller airline, smaller industry. we will do anything we can to manage that. jetblue has never furloughed an history.in our 20-year we have had great success already. our crew members have taken some voluntary retirement and that has helped us get through this in a way that is sustainable. could you see yourself withdrawing from certain cities in terms of the network you are operating at the moment? there's a people affect. is there and network effects in

terms of what it looks like? that is a great question. teant will bounce backs -- min will bounce back strongly. the leisure markets may be flying three to five times a week a while. we will be flying three or four flights a day. any not think that there is -- every day i think we will bounce back eventually. matt: that was robin hayes, the jetblue ceo, speaking to sky johnson -- guy johnson. coming up the u.s. economy and

financial stability under threat. fed president sees a recovery. our interview with robert kaplan. this is bloomberg. ♪

matt: -- leigh-ann: this is a special edition of "bloomberg markets." i'm leigh-ann gerrans with your bloomberg business flash. a shakeup at aston martin. the new chief executive will be the head of the mercedes performance division. aston martin is struggling with debt. a billionaire investor became chairman a month ago. the head of the international

energy agency warns that global oil consumption has not picked. hopes that there will be a change in him missions. that it is likely that demand will go back to where it was. according to a new filing -- hertz says the coronavirus devastated its revenue. it's global revenue plunged 73%. that is your bloomberg business flash. matt? thank you for that. we spoke with dallas fed president robert kaplan for his projections and when the economy may begin to level off again.

take a listen. with businesses reopening of think you can see a good, slow, steady recovery. what i'm worried about, despite what the government may say behaviors thatin consumers will be reluctant to engage in. example for me. i think at this stage to recover faster the health care policies are central. what do i mean by that? ubiquitous testing. good procedures. -- we are doing more

testing in texas but i would a project to really emphasize testing and quick ,esting in front of stores restaurants so people have more confidence. i think until we have that, there will be limits to how fast we can recover. without certain types of may limit our gdp growth. our unemployment rate would be more elevated than it would be otherwise. >> i can't let you go without talking about the oil patch. do you have me forecast for where the industry goes?

said that city fed they expected of 40% rate. is that realistic? we are seeing this in texas -- and we are seeing it globally, but we are seeing lots of drillers shutting yen. it's not economic to drill and they are just shutting down. we think that it will go from the fourth quarter of last year, it will end of this year closer of --8 billion barrels 10.8 million barrels a day. yes, you will see bankruptcies, restructurings, not only drillers, but those who service them. having said all that, it it's our own view that people will begin to drive, we will work off

axis -- excess inventory in 2021 or 2022. in the meantime this year you will see lots of pain and .estructuring many in those wells does it go on? robert: it depends. once you shut in a well it takes time. price is in the high 30's or the 40's.

it's our own forecast at the dallas fed, even with that reduction, the actual daily production is much less. we have further reductions. some of those shut-ins -- right now at their peak, as much as a million and a half or 2 million barrels a day. even if you start drilling again, you will have a natural reduction. you need to drill a law more -- a lotreplace the more wells to replace the production. that was dallas fed

president robert kaplan speaking with our very own michael mckee. coming up, details on what could be one of the biggest corporate bailouts and german history. that's next. this is bloomberg. ♪

matt: welcome back to this special edition of "bloomberg markets." i'm matt miller in berlin. the government is close to bailing out its flagship carrier lufthansa. the two sides have been 9 billion euro, rescue$10 billion

package. joining me, our guest to follows this industry and airline very closely. thanks for coming on the program. how close are we? is it a matter of hours, days before we get this a loud that lufthansa apparently badly needs? matter ofobably a hours. they do need it badly. there's no doubt about it. the biggest corporate bailouts and the pandemic started probably. is also the first bailout includes the government directand direct -- a investment, and the government really wants to get it right the first time. that is why it has been so difficult. austria,e's

switzerland, belgium. ofy own airlines and all these countries. management wants to have their say and they will challenge the it may distort competition. all of these participants have their own view. they also want a carbon dioxide emissions reduction. they want to motivate people to take the train. they do not want to be distorted. a management package to get back asm soon as things is done -- things are done. matt: rich, what are you hearing from our team in brussels? is it likely the eu approves the bailout or will they dragged their feet because of concerns

from competitors, but also from other countries that germany is helping its own industry a little bit too much? one of the problems in aviation is there's lots of governments out there using their airline for national interest. it's hard to say how aid packages can be fair or not. the dutch and the french government have been holding this for years. in germany, the money will be tied to strings and the european commission. things that can -- soe that is demanding they other airlines can fill

some of those slots. matt: thank you. richard covers the airline industry and deutsche lufthansa press on this bailout that could come, as he said, in a matter of hours. coming up next, a senior u.s. economist joins us. this is bloomberg. ♪

♪ >> it is 10:00 a.m. in new york,

4:00 here in berlin. usn u.k. markets are closed on this memorial day, and that is why we bring you this special edition from germany. i'm matt miller. ."lcome to "bloomberg markets trump awaiting president at arlington cemetery, where he will be laying a race for memorial day -- a wreath for memorial day. let's check in with those countries where trading is on. for example, here in germany and over in france, we have a full trading day. the dax benchmark index in frankfurt is up 2.5% right now. 1.7%.c 40 is up at the bottom of your screen, you can see s&p futures. u.s. futures also trading higher right now, and the red arrow is

on gold. a lot of safe haven assets this morning are not getting a bid. that is because this risk on mood is sweeping around the monday to kick off the week. -china relationship is worsening dramatically in the past few days and months, with chinese foreign minister warning that some in america are pushing relations to a new cold war. for market reaction, let's turn custer.s thanks so much for joining us. how important is this? the coronavirus has occupied all of our time for the last two months, and all of a sudden, this twist with some in the u.s. blaming china for the pandemic

is getting markets' attention. how key is this? >> i think it is important. china hashat u.s. and always been a roller coaster over the past two years, basically since trump got elected in 2016. breakught there was a since we had this fade one trees -- this phase one trade deal, but obviously the virus is putting things upside down, and we have the election as well in november, so a step up in the rhetoric was to be anticipated. i think especially, as the u.s. data and the u.s. labor market is not doing so well, there's to move thee need focus away from the state of the

u.s. economy to other topics. that being said, our scenario is not putat the u.s. will additional tariffs on china before the elections. president trump has given every incentive to keep the stock market ebullient because basically -- stock market buoyant because basically, you need to win florida. retirees with on pension funds, so that requires concrete action towards china. i would expect ups and downs and rhetoric before the election, but no sharp escalation in terms of concrete actions. but that is something to be monitoring. what kind of recovery are

you expecting from the u.s. lockdown, andhe how would that be affected if there were a cancellation of the phase one trade agreement? let's face it,: the phase one trade deal will be a difficult trade agreement to enforce. we know that china is already behind. they were supposed to import a lot from the u.s. we already knew when they started to sign the agreement that it would not hold for long. the question was for how long. the targets were just too ambitious. we knew it would run into trouble. of course, the coronavirus crisis is making this phase one trade deal run into trouble earlier than everyone expected, but however, the key here is whether the u.s. puts additional

tariffs on imports from china. again, we do not see that happening. if that were the case, it would definitely be a hit to business sentiment, to confidence, and it would definitely slow recovery from the coronavirus. right now, the u.s. economy is reopening. however, the data is struggling to get back to where we were going into the coronavirus crisis. there is some anxiety among consumers. you see that in high-frequency data. people are not spending as they used to before the coronavirus crisis. i think that is an issue, and i think it will take time for consumers to spend as they use to before the coronavirus crisis. so the unemployment rate may stay high, around 10%, and same for gdp. summer 10%p by this below the december levels, so

this is not a v-shaped recovery in the u.s.. i think it is more like a u, and it will be slow and gradual. matt: what do you expect in terms of the unemployment numbers? we have seen a massive number of americans lose their jobs. we are talking about well over 30 million people in terms of initial jobless claims. when do you think that wound will be healed. is this going to take two years, or more like five years? thomas: in terms of the unemployment rate, we are probably close to it right now. i would expect the peak to be probably a bit north of 20%, and then the decline to be slow, still about 10% by december. 10% is the peak of the unemployment rate during the global financial crisis. it is still a very high unemployment rate, and that is just due to those sectors like

tourism, travel, restaurants, so on and so forth. add up all of this employment, and it is not going to come back easily. likely to that is continue for a while. ive years is a bit long, so would expect somewhere between two years and five years to completely go back to full employment, assuming we don't have a normal recession in the meantime. in the u.s., they've got federal policy that they can use to bring about quicker actions. you're going to see some infighting. we've already seen it in terms of funding, recovery, and we will probably see some infighting in terms of some countries having an advantage, a competitive advantage. is that going to make the u.s. recovery faster, or do you think the miracle macron agreement on

some port of -- the merkel-macron agreement on some form of debt is going to keep up? thomas: there are some good things in europe in the sense that many countries have put in place way guarantees, and a sense of people not formally losing their jobs, and therefore, you could argue the recovery will be faster because there will be less friction caused to reabsorb people into the labor market. i think in the u.s., the adjustment has been so severe that you could have a lasting consequence on the job market. so advantage here, europe side. the policy response, the advantages definitely on the u.s. side. we have seen massive fiscal programs north of 10 present in the u.s. in europe, we are thinking more 3% to 4% of gdp, plus the response at the european level , a that a bit lacking

lackluster. however, we have seen last week potentially a game changer in the form of this 500 billion fund that would potentially be given grants across europe, so some form of solidarity, some form of federal aid to those most affected sectors. however, there's still a lot of politics involved, and it will be tough to convince some countries, especially the thatlled frugal countries, they can share the burden of crisis, and this potentially mutual lies the debt -- potentially mutualize the debt at the european level. alsously in the u.s., you

have the republicans dragging their feet on the new fiscal package, but i would expect there will be another large fiscal package in the u.s. losingpe, we risk crucial time in politicking. are ai realize that you u.s. economist, but of course, you live here in europe, which is why a can ask you to compare and contrast the two. to be more specific, you live in , which is a different story. i am looking at the smi, and it is only down 7.5%, compared to 20% to 30% elsewhere in europe. what is the swiss recovery going to look like, inside the eu, but not in the eu? switzerland has a complicated relationship with also a complicated

macro backdrop in the sense that franctzerland, the swiss continues to be on the strong side, and therefore the swiss still quitek is heavily in the currency market to prevent the swiss franc to depress manufacturing activity, but also to get stronger, which could mean inflation. linked too very much the situation in europe, and the sense that europe remains the biggest export market for switzerland, but at the same time, switzerland is benefiting from its so-called safe haven status. there's a lot of inflows in safe money into switzerland, which makes the crisis complicated

because basically, you have to put out two fires at the same time, the currency affecting the economy, but also market which is still suffering from the coronavirus crisis and the lack of demand globally. so it is a complicated picture in switzerland. is interesting to see. europe, and some ways, is sticking to conservative austerity more than the u.s.. you mentioned the trillions of dollars being spent there. really, the u.s. is moving t, right?me form of mm which atnetary theory, least the republicans would have considered a little bit wacky just a few months ago, and now they seem to be converts. how is this going to affect

market assets like the dollar? thomas: right, we would argue has taken hold in the u.s., a regime where rates are basically going to stay low for a while and the federal reserve is likely to extend its justce sheet further by putting more government debt on its balance sheet. wet is the process that could be in for a while. we don't think we will shift to mmt, the textbook version, if one exists. the pure version would be to put the federal reserve under the white house from a hierarchical perspective, or have much more coordination between treasury and fed. we have already seen a lot of coordination, but pure mmt would be coordination to the extent that the government would issue

perpetual debt, and the federal reserve would just put it on its balance sheet. we think that is a step too far. regime, themmt current regime, we think the risk is rather for lower inflation rather than higher inflation. if we were to shift towards pure mmt, the risk would be higher oflation, with a lot confidence from the domestic economy players and foreigners that would start to lose faith in the u.s. dollar as a reserve currency. so whether we stay in the current regime or shift to another regime of mmt, i still think pure mmt is a few steps away. we are not there yet. inflation to stay quite contained because of the lack of demand in the economy right now, and i would still

expect politicians to tacitly agree on low interest rates for a while, but not to put the federal reserve directly under the white house. resistantey are too about that, and the senate is still rejecting a lot of trump appointees to the federal reserve. i see that as a sign that the politicians are still putting movingin terms of towards the federal reserve being directly under politicians' control. that is probably a good step in the sense that we are staying in this soft mmt regime, but soft mmt means financial repression is here to stay for a while. pure you see a closer to version of mmt in japan, right? that is what you said in your research. you don't see any inflation there either.

do you think that at some point, all of this spending begets real, out-of-control inflation that we are all so afraid of when we do this kind of spending? japan, there is still a debate whether they are doing mmt properly. feddifference between the and the bank of japan is the bank of japan is buying equity etf's. onlye fed, they are still buying corporate bond etf's, which is already a big step, although i would argue that the way they are doing it, leveraging the exchange stabilization fund, a fund that was used for currency intervention, by using that as a backstop for the fed to go in and build those creative credit facilities, that is a big step which potentially opens the door at some point for the federal , say, ifuying equities

there was more stress in the equity market. you could definitely use esf to backstop fed actions, so this esf use, which is a really new thing in this crisis, not used in the previous financial crisis, is potentially pandora's box. i think that is potentially worse if we go into another bout of stress. we are not there yet, and i would also look at the architecture of how the fed responds to the government and the u.s. the federal reserve system is still a bit of a comp look at it animal in the sense that you have 12 federal reserve banks still owned by commercial banks, and the board is indeed president andhe put forward by congress. so i think you see the need for that to happen before the fed

gets under direct political control from government. and in japan, we still have an indefinite central bank, even though there's a lot of pressure on the bank of japan. nonetheless, when we look at all this buying and see that central banks are not only getting involved in fixed income, which they were already, but then now equities, and we see the fed buying etf's, doesn't this concern you as a market economist that valuations are kind of built on a house of cards? thomas: i think what is equities,g is that , areially like tech stocks doing very well at the same time that some safe haven assets like the swiss franc i just mentioned have been doing well so far this

year. also gold. matt: thomas, i've got to break in there. we see melania trump there walking with some u.s. atvicemen to lay the wreath arlington national cemetery to commemorate the fallen servicemen of the u.s. , we expectrump president trump is with her as well, and he is going to lay the wreath in this ceremony. let's go to washington, to arlington, virginia, just a few miles outside of washington, and watch this important ceremony, the laying of the wreath on memorial day. matt: i don't see the president

yet. it could just be that melania wanted to get in ahead of the crowds and wanted a place to stand to watch the ceremony. but you have to assume that if the first lady is there, the president is closely behind her. and we do see, indeed, a number of people walking up. theren see the serviceman with his mask on. it is very interesting to see that even some of the numbers of the military there are wearing reduce theder to tok of coronavirus spreading any white house officials. that would be a real problem because we don't expect a president himself to be wearing a mask. he often doesn't wear a mask when he has appeared in public. he does sometimes put it on behind the scenes, as we know from his visit to the ford

factory, but that is why you will probably see a number of servicemen wearing masks as well. let me get back to thomas costerg and ask about the manufacturing picture in the u.s. just talking about the president visiting before it factory, i have been wondering a lot lately -- visiting the ford factory, i have been wondering a lot about if we will see movement and supply chains. there's been a lot of talk about it, but i am not sure if we see companies making moves to bring supply chains closer to home in order to reduce the risk of disintegration during a global pandemic like this. what do you expect? i think this theme about reassuring is a bit overhyped, to be honest. reassuring -- re-shoring is

difficult. it is more about the taxes on our labor, about infrastructure, know-how, your network of suppliers. what i would expect globally is more diversification at the people andl, i.e. spreading around the globe their manufacturing, but i would stay quite cautious when we hear those news headlines about re-shoring to the u.s. we have been thinking about re-shoring to the u.s. for quite a while now, and it has not really happened. look at the foxconn plant in wisconsin. that did not work very well. it is more than just labor costs. it is really complicated. mexico, to some degree, may win back some business, but i would moving of large

factories back to the u.s. i would expect some moving outside of china and spreading around asia. is more the supply chain diversification then anything else. matt: so you don't expect a lot of manufacturing jobs to come back and help with the recovery. i thought it was interesting musk,g from elon talking about how important manufacturing jobs are here. is that going to help in the recovery? big challengethe also in the manufacturing sector acclamation. jobs are being replaced by robots, especially in factories. if you now visit a carif you no,

you will see less and less workers. [indiscernible] is going toation stay low in the coming years, and my view. because again, workers do not have the bargaining power. these robotsng where more jobs will be automated, and more than just manufacturing sector, but also the services sector. we are seeing software replacing human work, including in services. bargaining power is not on the employee side. that means wages could stay constrained, and that could also mean inflation stays low. i think automation will be another very important theme in the years to come. first, the numbers over the past few years have not been very good. there's not been a big creation

and manufacturing. another challenge is what is going on in the shale oil sector. the u.s. shale oil sector is going to struggle for a while, given the current level of oil prices. we know that shale oil is a key underpinning of the manufacturing sector, especially over the past few years, and that is going to be challenged by the low oil prices that we are seeing. so we may face a long adjustment in the shale oil sector. that is going to affect the manufacturing capacity. hashe manufacturing sector some strength, like car manufacturing, aerospace as well, but outside of that, i would not expect a u.s. to come back anytime soon. i thing all of the jobs that have gone offshore, will probably not come back. matt: replaced with robots. thomas, thanks so much for joining us and spending some

time with us as we wait for the president to show up at the arlington national cemetery. pictet,costerg from talking about the u.s. economy and the recovery expected. we have seen melania trump, the first lady, arrive here at the daytery for the memorial service. we are still waiting on president donald trump to get here and lay a wreath. in the meantime, we will take a break. markets in europe are up across the board, and u.s. futures point to a higher open as well, with s&p, dow jones, and nasdaq futures all up 1%. this is bloomberg. ♪ staying connected your way is easier than ever.

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faster than a call. easy as a tap. now that's simple, easy, awesome. 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. ♪ matt: welcome back to "bloomberg markets." we are still awaiting president trump. he was due to lay a wreath at a

ceremony for memorial day, honoring the fallen soldiers in the u.s. we expect him to show up at any point now. is, ife has arrived, and assume, standing on the steps, waiting for him to come and lay the wreath. we got to expect them to come at any point. when he does, we will bring you this ceremony live, as you can see from arlington national cemetery. let's check in with bloomberg first word news. leigh-ann gerrans is here with your headlines. in hong kong, protesters are bowing to stage more demonstrations. police used tear gas and a water cannon against demonstrators in a shopping area. at least 180 people were arrested. japan has ended its nationwide state of emergency.

coronavirus cases have tailed off, and prime minister shinzo said at a news conference that revising the economy is now the top priority. the u.s. will prohibit the entry of most noncitizens arriving from brazil. -- in virginia to lay a wreath to commemorate memorial day. let's watch. >> present. >> present. >> arms. ["the star-spangled banner"] ♪

>> present. >> present. >> arms. ["taps"] ♪

>> order. >> right shoulder. >> arms.

the vice president and president walking out of arlington national cemetery, followed by the first lady, melania trump, walking away after laying a wreath to commemorate memorial day in the u.s. it is a national holiday to remember and honor those who served and paid the ultimate price, gave their lives to defend the country. back here in germany, the government and deutsche lufthansa have reportedly agreed on a bailout. the two sides had been negotiating a 9 billion euro, almost $10 billion agreement. joining us to discuss the details is bloomberg senior editor benedikt kammel. what do we know about this agreement? how much of a stake is the german government going to end up with?

will it have a blocking minority, something list anza executives reportedly wanted to -- something list anza -- somethinglist anza -- ufthansa executives reportedly wanted to avoid? edikt: what we are hearing his discussion of a stake of anywhere from 20% to 25%. 25 plus one would give them that crucial blocking minority, and that is something that the company has not been very keen to see. they want to remain independent, but they don't really have a choice at the moment. the industry is in real distress, and deutsche lufthansa is pretty much grounded entirely. they are running low on funds and weeks away from really requiring a bailout, so what we are hearing is that it is the

final stretch now for the government and deutsche lufthansa. it has to go through the bailout steering committee at the government, and the eu will have a hard look at it to see if they will approve it as well. a couple of formalities still pending, but it seems that we are on the final stretch, and we might know more by then. matt: what about brussels? is the eu going to approve this? there's been more and more criticism not just from michael o'leary, but other governments as well, that maybe the german government is doing a little too much to help its flag carrier. benedikt: there is certainly concern. you mentioned michael o'leary. he has been very vocal in his opposition to this deal. it means that they will have to fight with both hands behind andr back while lufthansa

others like air france get bailouts. they will have to set a timeline on how the money is used. it looks as if the eu will waive this through because the real , it looks as if the it is fine, but we are still awaiting that final approval. matt: thanks so much for covering that story for us. it is one that we are all waiting for.

and we talking earlier, , that itr any moment is a matter of hours rather than days. we will keep on that story. benedikt kammel, bloomberg senior editor, coming to us on lufthansa. coming up, the german economy posting its biggest decline since the financial crisis in the first quarter due to the coronavirus pandemic. ofwill dig into the details the biggest drop in german gdp and more than 10 years next. this is bloomberg. ♪

matt: we've got breaking news out of berlin. as i expand, we are expecting

the lufthansa bailout to cross at any moment. indeed, it has just dropped. germany reaching an agreement on as much as a $9 billion bailout for its flag carrier left anza -- flag carrier lufthansa. we are going to hear, it looks like, from the german economy at 6:00 olaf scholz p.m. germany has a separate minister for the economy and for finance. from alton meyer at 6:00 p.m., about an hour and 15 minutes from now.

cummings, whoinic was apparently going to speak, but is not as weighty in any sense as peter all meyer -- , so we will hear from the german economy minister. 6% in the first quarter. the economy held up better than in france and in spain, but the second quarter is likely to record the big hit. joining us from frankfurt is our viewer chief -- our bureau chief daniel schaefer. let me ask you, first, your reaction to this lufthansa news, meier isfact that alt going to speak later. does this mean they have been able to get it passed the european union? daniel: we don't know that yet from the statement. they were still haggling with the european union on questions

the slots that the european go,ission wants them to let and other questions, but it looks as though they have neared an agreement with them because ,o much of the other issues like how long they will have to pay back the loans and the money they got, so this was a crucial point as well. this really looks like a big deal, and we won't see a bigger problem from the european .ommission let's talk about the gdp, the ifo data.

we are already starting the reopening and recovery process. daniel: yes, the reopening has ,tarted already a few weeks ago and we are also seeing some hope in the numbers.he well,ings aren't all because the second quarter will see the bottom of the downturn. the big question is how long will this bottom actually last. we had the chief executive of siemens recently saying he things we have reached the bottom, but he was very skeptical that we will see a quick rebound. it could take some quarters for things to really come back because people are still

reductive -- are still reluctant, and there's not a lot of investment by companies yet. matt: thank you very much. daniel schaefer there, bloomberg's germany bureau chief. bailout for its flag carrier for 9 billion has been agreed. we will hear from the economy minister on that bailout, and no doubt on the gdp figures as well. also, another programming note for bloomberg television, starting tomorrow in the u.s., joined tom keene, jonathan ferro, and lisa abramowicz for "bloomberg surveillance." it will be simulcast on bloomberg radio and television from 7:00 a.m. eastern. surveillance will be extended, basically, with a

radio and television simulcast that he will be able to see at 7:00 a.m. new york time. of course, "surveillance" with francine lacqua starts earlier than that, so i think now you will be able to catch five hours of "bloomberg surveillance." this is bloomberg. ♪

matt: live from berlin, i'm matt miller. this is a special edition of "bloomberg markets" for the memorial day holiday. there's no trading in u.s. no trading in london, either. another public holiday of some sort in the u.k. we are looking at gains across germany and across france, as well as other markets that are open. the majority of the big news is

here. here is one more story to prove that. bayer is starting to resolve its legal problems. according to bloomberg sources, the german health care and agriculture giant has reached a verbal agreement, or many verbal agreements, to settle a significant portion of its u.s. cancer lawsuits. the deals are part of bayer's plan to end a costly legal battle over use of its round up weedkiller. ,or more, we bring in tim loh who covers the company. this basically wraps up up to 85,000 of the 125,000 cases outstanding. these doorstep for that. the deals still need to be mark a but yes, it would massive step forward in this long, arduous journey. the first question is how

much are the plaintiffs going to get. how much will be awarded to people who, for the most part, have some kind of cancer and are claiming that it was caused by roundup? tim: one thing we are reporting today for the first time is that thatiant galaxy of cases amounts to about 125,000 right now. we are also reporting that they has a plan,bayer that they are willing to spend $10 billion to address all of those cases, and then also the potential for future cases, people who have used round up who haven't developed non-hodgkin's lymphoma and might bring a suit down the line. the thinking is $8 billion of that debt would go to current cases, 125,000. and within that, there's a kind of spectrum of what legal

experts would consider very strong cases, and that peters out. a lot of negotiations going on, from what we hear. some of the earliest and strongest cases, those people could be seeing a couple million dollars. comeof the other cases down to a couple thousands of dollars. matt: the strange thing i thought when reading your story is that i guess they want to continue selling roundup without any kind of warning label for people to use in their yards or on their farms. that the company concerned people will continue to get non-hodgkin's lymphoma and then sue the company again? tim: you put your finger on a very complicated situation here.

bayer insists that the product is safe. they said that all along, and they maintain it. the you pets -- the u.s. epa has backed them up. bayer is appealing the three cases that it lost. the first one is going to go before the appeals court next month. [indiscernible] so i think in their eyes, they would see dropping something on the label as not necessarily admission of guilt, but almost misleading because they insist the product is safe. it is a strategy a will have to consider, but maybe it

will be that nobody can buy it. thank you so much, tim loh, our reporter covering bayer. coming up on the european close, i will be speaking with james bevan, ceo of ccla investment management. this is bloomberg. ♪

♪ >> it's 11:00 in new york, 5:00

here in berlin, welcome back to the special memorial day addition of bloomberg markets. closedd u.s. markets are on this holiday commemorating the fallen servicemen of america. let's check in and see how those indexes that are open are doing right now as they close. are showingthe cac some decent gains. , closing at around 11,350, i wanted to point out gaining,ee s&p futures and we see dow jones futures gaining as well. see we were going to have an open and the u.s., we would see this possibly carrying through into asia. let's