♪ francine: global stocks are firmly in the, despite tensions. nearcoronavirus deaths 100,000. and the u.k., boris johnson stands by his embattled -- and insist stores in england will open on june 15. sweden did not close its economy but still predict a 70% contraction this year. this as the nation's death toll

surpasses its nordic neighbors. we hear from magdalena andersson . good morning, good afternoon, good evening, everyone. this is "bloomberg surveillance." i'm francine lacqua in london. let's look at the markets to give us a sense of what they have been doing. stocks in europe are rising with u.s. equity futures. easingconomy -- lockdowns in some major countries seem to be calming anxiety because geopolitical tensions between the u.s. and china. shares off in hong kong and sydney. treasuries dipping in european trading after the three-day u.s. weekend. i am also looking at wti. that is advancing past $34 per barrel and new york in hopes that the market may actually rebalance after historic output cuts. let's get straight to the bloomberg first word news. virus hotspot of

europe, yesterday, italy reported the fewest new cases since february. daily fatalities in the country were below 100 for a second day. it comes as the global death toll tops 340,000, with nearly 5.5 million cases. prime minister boris johnson's most senior advisor is refusing to quit or apologize. says --cummings the prime minister has continued to back his advisor but expresses regret for the pain the episode has caused. nissan and renault are shoving their merger plants, according to reuters. they want to fix their alliance and work to recover from the coronavirus pandemic. both carmakers will announce restructuring plans this week. the companies are planning substantial caskets that could hit tens of thousands of jobs -- cost cuts that could hit tens of thousands of jobs.

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. this is bloomberg. francine? francine: thank you so much. china has pushed back against its blacklist of 33 of its firms by the u.s. the foreign ministry has described the restrictions on access to american technology as interference in chinese internal affairs. sign the latest side o -- of a rapid deterioration in relations between the two nations. joining us this morning, marie owens thomsen, group chief economist at i'm francine lacqua in london. wealth management -- chief economist at indosuez wealth management. what kind of gdp figure worldwide are we left with for this year? well, our scenario is probably a best case scenario.

we are looking for a drop in global gdp of about 3% this year with the risk being firmly tilted to the downside. a contraction. i hope i said that. francine: in a contraction. in terms of the risk to the downside, is this the trade war? is this something else? is it a second lockdown or all of the above? marie: yes, i think it is pretty much all of the above. we do have this accumulation of wheerein many places, the covid crisis perhaps hit some countries when they were in a relatively weak position. every country pretty much had record debt levels already going into this crisis, so that's a shared problem, obviously. and political crisis, geopolitical issues, etc., all of this, you know, paint a very uncertain picture going forward. that's for sure. the only thing we can be certain about is -- sorry.

go ahead. francine: what does it mean for central-bank action? will they have enough tools to make sure that the recovery is strong? marie: well, i think the open-ended commitment by major central banks and as well by governments around the globe to, you know, provide whatever support is needed, i think it's very hard to improve upon that. indeed, we have seen all of these measures being rolled out at a pace and scale that we have never seen before, certainly since the second world war. so i don't think we can really fault the intentions behind all of those measures. what we can perhaps question is indeed how some of the more fiscally oriented packages are being rolled out. is the money actually reaching the people quickly enough? in the bureaucratic efficiency also that we have a

significant risk factor. francine: when you look at what exactly has been going on in the markets, there is, you know, equities seem to be ignoring a large part of what is going on in the economy. are you worried that there will be a correction soon? that: well, i think volatility has to be anticipated because of all the uncertainty that surrounds any kind of projections in this epic crisis. so expecting that things will improve in a linear fashion from here without any setbacks, that seems, that i would class as wishful thinking. i think that markets will oscillate with the data, you know? we will get some data that is better than expected, some that is perhaps worse than expected and i would think that the markets will feel the impact of those fluctuations. francine: have the markets so far behaved like you thought they would? well, i mean, everything

that we are looking at seems unprecedented these days. we had an incredibly sharp contraction in financial asset valuations, of course, when this all happened. and then, we have had this eye so i think,ound, you know, that's probably the new normal, so to speak, that we have such a large setback and then continue as if nothing happened. so i think when we start reaching, as we are, record high levels in some assets, then i would think that that could be an opportunity for investors who are already very exposed to those assets to reenter the market at a lower level. i think there will be such opportunities. always hard to time them but i do expect that they will appear. francine: will more central banks go into negative territory? there has been a lot of speculation that the fed will follow suit from the ecb,

although there has been resistance from jay powell, and that the bank of england can also do the same? marie: yes, exactly. again, in these unprecedented times, it's hard to rule anything out. we all know that anything can happen. for now, it is only possible to take them at face value. so obviously, these discussions are taking place and we cannot rule anything out. now, as to the probabilities, a gain, going on the central banker's statements, i think the probability is low that the u.s. will adopt such a policy. when we carry these kinds of sovereign debt burdens, the short term interest rate is not necessarily the most efficient monetary policy tool. instead, the qe actually is a more direct and effective policy tool under the circumstances. i would expect that we will see more qe. i think that is going to be the prime policy -- monetary policy

tool going forward. francine: what does it all mean for fixed-income? so if you look at markets around the world, what will be under more severe pressure, maybe unexpected pressure? marie: well, i think we have lots of structural issues that have to be addressed. perhaps we have a message from the markets, rather than from me. if we look at how various esg, so environmental, social, and governance styled investments have actually beat, in many cases, beat their mother indices, so to speak, from the first part of the year until the end of april. dow jones, msc i all have a esg versions of their main indices. these esg versions have beaten the main indices by between 1% and 4% in the first four months

of this year. i think that is a very interesting take away. these funds have also enjoyed inflows in the first quarter, according to morningstar, versus outflows from all other kinds of funds. i think we are hearing something here, that the world wants to be more resilient. we have seen how our previous economic models failed us in this particular crisis, and we all seek greater resilience going forward. i think we have a message from the markets here in outperformance -- this outperformance of esg investments in the first part of the year and during this epic crisis. francine: do you see inflation suddenly in 18 months being our biggest problem? or are we just going to see a deflationary pressure for the foreseeable future? marie: inflation, i think, has not really been dominated by cyclical factors for a very long time.

it has been dominated by structural influences. of course, here, i would put the technological revolution as the main structural influence having depressed price increases in manufacturing goods for many, many years now already. we believe that this trend is services, andt service prices much more greatly going forward. so we see this with the changes also in online consumption, how we are all consuming more services online. so i don't necessarily expect much more disinflation than manufacturing sector, but i would expect disinflation in the service sector going forward. that pretty much argues for low and stable rates of inflation. francine: thank you so much, marie owens thomsen therefrom indosuez wealth management. a retail reopening, as u.k.

streets look to restart from the middle of june. our interview with one of the biggest names in the hotel world, rocco forte. that's coming up next and this is bloomberg. ♪

♪ ♪ francine: economics, finance, politics, this is "bloomberg surveillance." i'm francine lacqua in london. non-essential retail outlets look set to reopen in england

from the 15th of june if the government can control the spread of the coronavirus. what does the future hold for another of the sectors hardest hit by the current crisis? my next guest is one of the most famous names in the hotel industry. the forte group, of which he is chief executive. he started a new offering of luxury hotels and resorts. that business has expanded to 15 locations from london, to run, and shanghai. joining us now is rocco forte, founder of rocco forte hotels. when you look at the hotel industry, what it has gone through, the social distancing measures that would be put in place for the summer, when do you think we will see the hospitality business returning back to normal? rocco: not for a very long time. the impact on the business has been quite devastating. i've never run a business without an income before. in fact, never dreamt of doing that.

it's quite extraordinary. it depends on tourism, international travel, and london hotels in particular. we are not likely to see a resumption of that for some time to come. if you come into a country, you quarantine for two weeks. that is going to stop anybody coming there. at a time when other european , wetries are opening up are closing hours. you can just as easily catch the virus if you travel up the yorkshire as you can traveling to italy. , the future is very uncertain. even when hotels do start opening again, they will open on

unusually reduced levels of business and are likely to employ half as many as they did before. it is not a very satisfactory position. francine: can hotels be profitable whilst maintaining social distance at two meters? no, it makes it almost impossible for the tourist industry as a whole. airplanes cannot fly. theaters cannot open. which -- onrations which tourism depend on one not be able to function. again come in europe, they reduced the two meter rule to one meter, which makes it still difficult but at least possible. our government is very much behind the curve in all of this. francine: do you see any opportunities in the sector?

is this a time to expand if property prices go down? or are you just planning for the worst for the foreseeable future? i don't know if it's two or three years or could be even longer? rocco: -- even longer. rocco: obviously, we had a development program underway. we were in discussion with a lot -- and venturing into -- in fact, we just signed up -- i can't announce it. but, so we will continue to work on that. i do not think anybody is in a hurry to do anything yet until things settle down, in terms of pricing andions on their assets. possibly, the market will open up sometime in the future.

it is unlikely to return to untility at the moment the spring of next year. francine: if normality is not going to be until the spring of next year, do you think, you know, some hotels will have to go bankrupt? is there going to be a solvency issue? rocco: yes, of course. the, you know, the furlough scheme, and of course, there are furlough schemes across all the various countries, help a great deal. our chancellor was fantastic the way he introduced the scheme. that lessened the impact. with all the measures that have i still have got five within the month going out of the window. probably by the end of this month, would have wasted 50 million pounds for nothing.

that's what would have been invested in the fabric of existing business and also in future development. they case, i have got resources to take me through that. and a lot of businesses will not have that and so will find themselves in difficulty. many people will lose their jobs. the real tragedy of this whole crisis is that, is that millions of people will be affected and their families well into the future. to worktill continuing on a policy which is based on a false assumption that 500,000 people were going to die in this country. i think the government has become a a victim to its own propaganda. it has terrified the whole country. this disease is sort of a black plague again. a very smallt is minority population affected by

it. if you are under 50, you have got very little chance of dying, if any at of all. i am 75. i have had and i got through it so i emphasize -- empathize with older people and of course people with underlying symptoms, who are the ones that are suffering most. but the whole country should not be held to ransom because of a small minority of the population who like me can look after themselves and take their own decisions. francine: sir rocco, you can actually argue that the u.k. had a light touch lockdown approach compared to other countries where you do business, such as italy. touch.it was a light and italy, it was more draconian in that people were not really allowed to go out at all from their homes. the economy has been closed down as a result of that. lots of jobs have already been lost.

there will be a big level of unemployment when we get back to normal. of this disease is that it is not dangerous to most people. we should get back to carrying on with our lives, just as we did before. people can take their own decisions as to whether they want to risk it or not. people who are older and more vulnerable will obviously pay more care. people who are older and cannot take of -- care of themselves, you have to look after. continued the country to be locked down involuntarily when there is no need for? -- for it? francine: thank you so much for joining us today. rocco forte, founder of rocco forte hotels. we have a lot more conversation on central banks and inflation. this is bloomberg. ♪

♪ treasuries actually dipping in european trading after this three day u.s. weekend. germany's government debt also felt. 34 crude brent surpassed dollars per barrel in new york. central conversation is next.

francine: economics, finance, politics. this is "bloomberg surveillance ." let's get to first word news in

new york city with ritika gupta. outdoorin england, markets and car showrooms will be able to reopen june 1 if they can meet coronavirus guidelines to protect shoppers and workers. the government says that non-essential stores can open two weeks later on june 15 if the spread of the virus is under control. francis set to announce measures to support the auto industry, the first european government to do so, highlighting the crucial role cars play in the french economy. plan will include incentives to buy cleaner cars and step up efforts to develop electric auto batteries. the european is likely to boost its emergency bond buying program. that is the signal from the bank of france governor. he also signaled he would like to see the limits on the plan lose even more. meeting isext policy

june 4, and economists are increasingly forecasting it will add more stimulus. has died in stanley hong kong. the macauioneer of gaming in new street, where his casinos were granted permits. at fortune was estimated $6.4 billion when he retired. stanley was 98. eight. y global news 24 hours a day, on air and at quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries, i'm ritika gupta. francine: more than 80% of us say the -- to be more optimistic , one in five expect a significant impact in 12 months time. journey us now is emma jones,

founder of enterprise nation. when you look at the survey come everyone is expecting a huge impact, especially if you are small to medium-sized enterprise. as the furlough scene worked? are they nervous about reopening? emma: is this is concerned about a lot of things at the moment, so the hospitality sector are wondering if there will be sufficient cash in the bank to open under safe regulations that need to be introduced. the good thing about the survey is that looking ahead, entrepreneurs are looking ahead to the road to recovery, so when you look ahead and say do you think your business will be impacted in 12 months' time, financial by -- financially by coronavirus, the numbers say it will be reduced by 90% and then two years later it goes down 8%. aheadlly they are looking

to say how can we reopen and get back to business. francine: what is their main concern? if you break down the report and look at what surprised you the most, do they worry about their business being upended? is it supply chains? is it coronavirus and a second lockdown? emma: it is many things. in the first couple of months, the big thing on the mind of most small businesses is cash, how they get a hold of it, loans, and all of the government support schemes that have been out there to help. cash has been a concern. customers -- will customers come back when the businesses get back into business? and also business owners are concerned about their own teams. people working from all different places -- this has been one of the things on the mind of the founder, how do i make sure my team can still

operate efficiently, particularly with the case that to put team members on furlough. how do you bring that back in the business and maintain the kind of culture that your business has been known for? multiple things are on their minds at one time. that continues to be the case. i come back to the point that they are incredibly, by nature, founders are very optimistic, resilient, and we rely on them to come out and come back to business, so hopefully it brings the economy through. startne: should they worrying about possible negative rates in the country? what would that do for their loans the ec? emma: most have looked at their financial plans, the higher amount, what has been incredibly popular among small businesses is the bounceback loans. onclays has lent $3 billion

the back of that loan. just to get cash for businesses when they need it. this is why businesses have been calling for a reopening of the economy sooner rather than later. business owners hold this in very high regard. they know they have to open and make it safe for teams to return or for customers to return. they are very aware of that responsibility. but business owners across the land are really keen to reopen, get the economy started again, so that they can generate the cash and start to pay loans in 12 months' time when repayments kicking. francine: have the furlough schemes worked for small and medium-sized businesses? do they have the right axis and do they feel supported if they need advice? emma: the furlough scheme has been very well received, and it has been introduced to prevent more small businesses from laying off people in a miss fashion. it was very timely.

the furlough scheme, when the platforms opened up, on the 20th of april it was incredibly well received in terms of how efficient it was. businesses were getting payments within six days. the furlough scheme has worked. as you know, it is going down in august, where the businesses themselves will pay more of their salary. part-timeoving to a furlough position, which gives businesses the flexibility of bringing employees back into the business, but they will have to pay more for it. this is the main thing we are hearing from across the business base. owners put their team on furlough, how do they reintroduce the business where employees feel safe to go back to work. and also that the employees feel loyal towards the employer and still feel that they have a big role to play in how that business keeps on trading.

so there is lots of communication happening now between business owners, hr managers, and the teams that are coming back. but the furlough program has been a success because it has delivered the results the government wanted, which is avoiding mass redundancies and extending through october with part-time furloughs through august is probably a good move. thisine: how do you see changing the business world? will a lot more people work from home even with the lockdowns lifted? emma: there are a couple of shifts and most of them are positive, so fortunately home working is here to stay now. that is maybe not such good news for property owners who will now be thinking about how they repurpose space to meet

currently with businesses. but across the board in the cu last couple of weeks is a huge content for how to do work online. businesses have turned to digital, they have set up websites, embraced social media to engage with their customers, and looking at adopting new things like accounting which will make them where efficient. that is one more thing that i feel is here to stay, is businesses embracing digital tools and products much more in an easy fashion than -- that makes us closer to our customers but also to run more efficiently. the two positives likely will be home working, productive home working, and this wonderful embracing of all things digital. francine: thank you so much, emma jones, the founder of enterprise nation, co-author of this report. coming up, regulating banks.

withof our conversation the european banking account champion -- chairman. and this is bloomberg. ♪

francine: this is "bloomberg surveillance." european banks could face a 350 billion euro hit to capital levels. the european banking authority says that is as loans turned sour in the fallout of the coronavirus crisis. we spoke with the ecb chairman this morning. that know from the report

the out yesterday, with thed-19 crisis in europe, reference that most people have of last as of december was five percentage points more than they had in 2009. that is the result of the over thethat has been last year so that banks have accumulated. on top of that, there are regulatory measures that have been put in place, may to try to ,ake sure capital was available and that leads to basically euros, basislion points of capital that could be used if needed.

so that gives us a comfortable position to start with this crisis. matt: what kind of losses did we expect? clearly it is going to be impossible for you to put an exact number on it. but can you give us a ballpark figure? some number, some range of numbers that we should expect in terms of the possible losses for banks stated here? for ait is difficult number of reasons, mainly because we don't know how the economic outcome will develop from this point on. we know that the initial shock to the crisis was very large. but how long will it be overtime? as importantly, there has been a large number put forward by authorities, in the area of loan guarantees, and of course those pressures will shield banks from potential losses and the underlying loans

that people have during the crisis. it is difficult to put an overall number. we run a stress test every two years of the european banking sector, so we took the results from the test from 2018 we howted that with aspects of -- at the start of the year. and then sensitivity for those sectors that would even come to covid-19. we increase the probability that those will default. been 240 basis points and 380 basis of potential loan-loss that banks may incur. that equates to 500 basis in capital the buffer, the of the banks have. so on average, and this should

be enough to support a reasonable amount. matt: i'm assuming that even the worst case scenario of your stress test did not include all global governments forcing a shutdown of their economies for weeks or months on end. arenpl's i'm sure you expecting to search her. to you expect us to see bank failures because of this surge of bad loans? difficult to tell because what we have done is an analysis of the banking sector, we are going to provide banking information for every bank so analysts can do that analysis and do what is appropriate. it is important to say that there is a solution on the part of the european union. banks are exposed to the same type of loans, so some are more

hurt than others. least, theres at are individual needs, and those should be dealt according to the rules that we have. systemic not cause any impact on the banking sector overall. francine: that was jose manuel campa speaking to us earlier. boris johnson is facing another day of pressure to discipline his most senior advisor, dominic cummings. he said he had not considered resigning, and it was up to johnson to decide if he should lose his job. joining us now is the bloomberg director for ema, stuart wallace. in the last couple of minutes we understand through the bbc that a jr. minister has quit over the lockdown actions of dominic cummings. under how much pressure is boris johnson right now?

>> more than you would have thought, in the sense that while he did not manage to get 20 senior mps over the weekend, there is a growing group of mps and his party that are getting very strong feedback from their constituents, and it is clear that there is pressure within the conservative party that something needs to be done, and what that solution is, no one quite knows at the moment. but it is also clear that on the other side the prime minister is nowlutely determined right for cummings to stay. he values him incredibly highly, and he is willing to put up with a certain amount of pressure to keep him in that role. francine: does he need him as an advisor to deliver brexit echo white it -- to deliver brexit? why does he need to hang onto him? stuart: cummings really understands the popular mood. that is not to say that where in

this particular circumstance he misjudged the public mood. but cummings was the genius behind the brexit campaign. he was the one that ultimately delivered it, and he played a similar role in other policy as well, which we have seen in the past few months with the pandemic. so all of that sort of leads us to the conclusion that boris, again, as things stand now, we would clearly like him to stay. we noted a slight change of language yesterday that maybe he left himself a little bit of wiggle room to get rid of cummings if he needs to. he used the phrase, "people will have to make up their own minds," which is kind of a vague phrase. for now he is still there. francine: stuart, thank you so much. coming up, sweden has taken a bold strategy toward tackling the coronavirus pandemic, but

has scandinavia's biggest economy been successful in its approach? we meet with sweden's finance minister. that's next. this is bloomberg. ♪

francine: economics, finance, politics. the former chair of the hong kong democratic party says china should drop its proposed national security law. emily lau says most do not want independence for the financial hub just to have their views heard. >> first of all, they should drop this national security law, which we rubberstamp parliament in beijing is definitely going to pass on thursday. if they were just cool it, stop it come and talk to the hong kong people, talk to the political parties, the legislators, what is needed, what should be done, what are the concerns of not just the political parties but the bigger

community, i heard some business people are saying they are rethinking their plans in hong kong. do you not think that now with this national security law or on terrorism, interfering with foreign forces, do you not think the professionals are worried? of course they are. but i think china -- and i hope the international community will tell beijing to really calm down and stop bulldozing this thing through. but i don't support sanctions from hong kong because in the words of some business people, that means the game is over. so why punish the 7 million people? i don't think that is a way forward. clarify then, your issue law but howch the

it is being introduced? emily: well, both. i think we are talking about both. if we understand the way they are doing it, it is very wrong and they should stop it. and then they should have a discussion with the community come and they should discuss why there are such violent reactions, why the people are so fearful and so angry. the thing to do is engage the people, not to just beat them on the head and try to crush them. >> does it feel like beijing has now lost its tempo or lost its patience with the progress hong kong is making, and it is very much willing to trade in, or at least put at risk its position as a global financial hub in order to maintain or consolidate complete control? emily: but they must ask why? why is it such a peaceful, safe city, -- why such a peaceful, safe city could go up like that.

carrie lam, the chief executive proposed, then months later she withdrew it. but by then the damage has been done, and the police were encouraged. and not just by hong kong but by mainland authorities to go out and beat the hong kong people up. over a thousand people have been arrested, but not one single police officer -- over 8000 people have been arrested, but not one single police officer. >> what can hong kong, or what can your side potentially do to communicate with beijing if you want to get a message across that what protesters are going for is not complete independence, which is what visioning is most scared of. right.you're most hong kong people are not going for independence. they are not going for the overflow of the chinese communist party. get my message across, but i do it through you, my dear. i'm sure they are listening to your program.

i speak as someone who cannot, those in mainland china, i have been banned for 25 -- 20 odd years. but through the news media, particularly the voices in the news media, when you speak to me, i speak to you, and i hope they listen. i hope that they can hear it. whether they listen or not is up to them. but i agree with you. we should have dialogue, engagement. and not using brute force. and i tell you, although we are just 7 million people, we are not going to roll over and play dead. ♪ staying connected your way is easier than ever.

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francine: global stocks firmly in the green despite tensions between washington and beijing. carrie lam defends china's planned security law and rejects criticism from foreign governments. u.s. coronavirus deaths near 100,000. in the u.k., boris johnson stands by his embattled top aide and announces nonessential stores in england will open on june 15. and sweden didn't close its economy but still predicts a 7% contraction this year, this as the nation's death toll surpasses its nordic neighbors. we hear from finance minister this hour. well, good morning, good everyone. we look at the markets and what is going on with the european union, and we heard from the ,rench central bank governor and he was talking about the ecb doing more and certainly not being deterred by the verdict a couple of weeks ago. tom: