nejra: good morning from london. i am nejra cehic. manus cranny is in dubai. the s&p 500 a racist this year's losses, seeing a 45% rally from its march low. mixed as asiande equities look at a stretch of games. christine lagarde says the pandemic plan is targeted and proportionate. the world bank sees the worst

global recession since world war ii. senate democrats with a sweeping police reform bill. manus: 6:00 a.m. in london, 9:00 a.m. in dubai. i have two pieces of paper, one is the dollar destruction story, is the bondte one vigilante trade -- it was not really a bear market, but what i like is he says the market selloff was a panic attack. i want to tell you i have had more panic attacks since 2009. i think they are inextricably linked.

nejra: it is always great to kick off the show with an update on how many panic attacks you have. i love the daily comments, he has coined another acronym, mother of all melt-ups. to classify what happened in the selloff is a bear market is if we are talking about a bear market, you might expect more losses to come. if you see this as a panic attack, you could have faith in further games. erase see the s&p 500 yearly losses. we are seeing green on the screen in asia for several days in a row, but weakness in u.s. futures. what a stunning move, 45% rally from the march low. 5% from a record. citigroup questioning what we have seen in terms of the rally, but you have other investors questioning how bearish they

were. we talked about dollar weakness, a ninth straight day of declines. we study up today, the 10 year yield dropped a little, and oil edges into positive territory. the dollar is absorbing privilege. markets, on the day the , the bond vigilante said he may no longer refer to it as a bear market. it was too brief and ended too strong to qualify. the shocking rally has claimed another bear, stan druckenmiller who warned about

owning stocks says he thinks he was too cautious. the world bank says the global economy will contract the most since world war ii, sending millions of people into poverty. benjamin jones, senior multi asset strategist, state street us now, he is our guest host for the hour. let's talk about the comments in terms of what we saw was a bear market or not. do investors perceive what happened in that selloff as a bear market? it does matter if we see losses or gains. benjamin: i think it does, and i pick up on the other comment you made that the market has gone through this panic attack. if you look at price action in march am i you could be forgiven for thinking investors had panicked during that period. the thing for me is that

investors remained cautious but not panicked through this period. a lot investors i was talking to were in a cautious position, they were not overly euphoric even though we had a positive market coming into 2020. at the beginning of january we were talking about a trade deal and easing tensions between the u.s. and china, everything looked positive. investors did not buy into that. there was a lot of cash on the sidelines. during march, investors did get more cautious. they were worried what was going on, and rightfully so. there was not any sign of panic. that is largely because investors had a lot of cash on the sidelines and were not in that euphoric state of mind. when you get that state of mind, you get a selloff.

there is a lot of capitulation and forced selling. that did not happen in 2020. we said today, stan druckenmiller as you highlighted, investors will be cautious to chase this rally as well. seen a lot money back into equities or risky assets. this rally has a lot of legs to continue. the other point is, if you look at how sectors have performed, the difference is within the index a lot of winners from last year continue to be the winners in 2020. the tech trade, the growth of value trade are intact. there has not been pressure on investors to capitulate and sellout. it has not been that painful for investors. rarely suffer from the

euphoria moment, i am more of an intermittent panic attack bear. momentum?e dollar's the selloff in the dollar, has that at any level added to the equity binge story? benjamin: i think it started to more recently. the dollar was performing reasonably well in april when equities were rallying. we are seeing a breakdown of the dollar now, and we think that has room to continue. we have a lot of questions about driving differentials currencies lately. i think that will continue. if you look across the developed market space, the rate differentials have largely disappeared. what has adjusted is you can go by u.s. assets such as u.s.

fixed income, u.s. equities. we can hedge the currency exposure to something you could not do before. there is down or pressure on the dollar going forward. is theu are seeing morey from europe has been than expected on the monetary side and the fiscal side, which was a bit of a surprise. that will start to help the euro against the dollar. we are looking at dollar weakness, but not a dollar crash in a changing trend currencies since the beginning of this year. nejra: if you think this equity rally has for the legs to run, what is the smartest way to play ?hat as an investor at the index level, by relative trades, by a factor of growth

versus value? benjamin: very much being selective. flows,seeing a lot of etf flows for example suggesting investors have been doing that through this year. the big index funds have not received that strong of inflows over the last couple months. but if you look at factories, yes. they have attracted more of the flow. it makes more sense to play the selective trade. if you think about what covid-19 has done, it has not put new trends in place. it has accelerated existing trends. working remotely for the last few months, and i expect that to continue for some time. that suggests we are more , and also technology for our personal lives.

the tech trade continues. hit is why the earnings will probably be positive for some of those tech companies, whereas -- manus: can we have a quick sum up where we are in terms of tech. a look at the nasdaq at record high, but it is underperforming the s&p 500. my question is, is tech richly valued because we look back to february and the nasdaq was far outperforming the s&p 500 at that time. are we reaching expensive levels in mega tech? a briefer path. i think it is still strong. stocks thate some .re, but broadly speaking

manus: ok. stay with us. i will get you up to speed with their first word headlines. the lockdowns around the world may have prevented about half a billion coronavirus infections, according to the first peer-reviewed analysis of the impacts of health policy. it comes as the world health organization says people without symptoms passing on the virus is very rare. ofcontradicts speculation asymptomatic transmission. boris johnson will talk his through thehe plans locked down restrictions as the nation reported the lowest number of daily death since the measures were imposed. no new cases.ng it is on schedule to reopen

nonessential retailers on june 15. a new round of arms control talks between the u.s. and russia. senior officials will meet in vienna on june 22. washington will enlist moscow's help to bring china to the table. washington wants a three-way treaty. past china has balked trilateral communications. nations are-- the about to mark the 20th anniversary of the first summit between the leaders. were hopes this would be a moment of reconciliation. 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.

coming up, ready to help, christine lagarde signals a willingness to help solve the german court issue over bond purchases. more on the story. this is bloomberg. ♪

manus: it is "bloomberg daybreak: europe.: ec president christine lagarde says they are willing to play a more active role in responding to the german constitutional court over its monetary policy. it is a fresh indication the central bank will work to defuse

the crisis. more recentnded crisis fighting initiatives, saying the net effect from last week's expansion of an emergency bond buying program by 600 billion euros to 3.5 trillion euros are overwhelmingly positive. >> the european commission's proposal for a revived financial framework and the next generation eu are decisive in this regard. largestd not forget the initiative announced with the associated proposal could have a positive impact on the international role of the euro. it will be important to get that package quickly. , seniorenjamin jones multi asset strategist, state street bank is our guest host.

when you look at what the ecb is doing and germany is doing, the partners say this is game .hanging, the scale if it is game changing, are you taking advantage of that from an equity exposure point of view, or preparing to? benjamin: i would agree with the sentiment, it is game changing and will be cast as to do whatever it takes. annual.multi it will play out for a long time. that was one of the key points we saw last week. it is the first time we see fiscal and monetary policy , somethingconcert that has not happened in recent years. we see that is more of a positive. with aplaying this recent shift in position, we think the euro can strengthen

from here. -- is onthat is it on sentiment. we are starting to get more positive with some other y's equityountr markets. there are structural issues and we have to remember the european equity markets tend to be out exports depending on and industrial markets. they are not the new tech market . they can benefit from this improved sentiment. we are getting more positive on the euro. the one area i am concerned about and has done well the last couple of weeks is the banking sector. we will get rallies around sentiment at low levels. environmentre in an where rates will be low for a

long time if not forever. the yield curve will be flat. that meet pick up on what you are saying about rates. there are some who believe we are at a turning point for german bunds. a 70% chance the 10 year bond yieldgoes into -- bund goes -- are you taking any positioning around bunds or fixed income in europe? the way we play in the fixed income space is to favor or btp's over bunds. in a relative sense i think there is compression there. there is some upside on german yields.

think the spread compression between the periphery is the better way to play it rather than outright bets. even if we get slightly higher yields on german bunds, it will be relatively small. the pressure from policy to keep rates low for a long time still. manus: what do you need to see? what you need to see to become more convicted on pan-european exposure? does it have to do with china or internal domestic reform? benjamin: a lot of it has to do with china, and the general trade conditions. covid, but story is the trade war is in the

background as well, that tends to be a headwind for european assets. i would like to see some trade tensions simmering down a little bit, and trade picking up, so people starting to move around the world again, flows of products increasing, that would be positive for europe. and generally a return to more stable levels of inflation across europe. we are seeing a bottoming of inflation in europe and the rest of the world. stabilization and trade, i am late jumping into europe, i have been pessimistic on europe for a long time, but it is better at the moment to wait for that conviction before you buy in as opposed to jumping in just yet. nejra: benjamin jones, senior multi asset strategist, state street bank stays with us for

the hour. coming up, the u.s. democrats propose a police reform bill urging action after weeks of protest. this is bloomberg. ♪

nejra: this is "bloomberg daybreak: europe." here is what you should watch out for today, ecb member speak some monetary policy at 9:00 a.m. and gdp expected to indicate the start of a deep recession. secretary-general will deliver an address him a strengthening of the alliance any post covid world. later the fmoc meeting kicks

off, they are expected to use the full range of tools to support the u.s. economy during the pandemic. nejra: and house and senate democrats propose a sweeping police reform bill. joining us with the latest is annmarie hordern. what measures are democrats proposing? annmarie: democrats are taking the energy on the streets about racial injustice and police brutality and want to put it into concrete legislation. some measures talk about prosecuting law enforcement officials, making that easier. it also looks at things like banning chokehold's, no knock warrants. nancy pelosi said this is a

first step with more to come. joe biden's campaign praised this package. how this get through the republicans and white house remains to be seen. manus: can we talk about the world health organization, the latest discussion around transmission from asymptomatic patients. annmarie: it feels like a 180. the worry was asymptomatic are the ones spreading it around, but now the world is saying it is harder and rare. they say it appears to be rare that an a sympathetic person transmits it to a secondary individual. it is based on reports from a number of countries. early reports sparked that concern because of this. of new england journal medicine said this would be the

achilles heel for pandemic control, they are waiting on research, but you have to think this is a bright spot. nejra: briefly, november election inching closer, what is the latest on that front? is what is going on in the nation when it comes to the reform bill, how will that be painted? president trump wants to get those massive campaign rallies with voters back in attendance. joe biden biden is meeting with andrtain number of people only just started seeing people, and he is wearing his mask. two different campaign messages heading into november. manus: are you ever coming home? annmarie hordern in new york. billions of euros to the rescue.

right here on bloomberg. ♪

manus: good morning from dubai. i am manus cranny. nejra cehic alongside me. this year'serases losses, seeing an almost 45% rally from its march low. stock futuresu.s. trade mixed. asian equities look at the longer stretch of gains in two years. christine lagarde defends crisis fighting measures, saying the pandemic plan is targeted and

proportionate. the worst global recession since world war ii. house and senate democrats propose a sweeping police reform bill. top lawmakers, including nancy in honor ofled george floyd. welcome to "bloomberg daybreak: europe." forave erased the losses the year on the s&p 500. the 45% rally, mother of all -- what is interesting is he is starting to question whether the selloff we saw as part of the pandemic should be called a bear market at all. the reason this matters is if you see it as a bear market, you might prepare for further losses. if it is just a blip in what is still a bull market, maybe you prime yourself for further gains. manus: indeed.

part of the narrative as well is going to be the dollar. the dollar is down for nine days in a row. that moniker that it holds might challenged. our guest host says the rally has less participants than we would normally have seen and the gns. still rei the dollar down for the eighth day in a row. this exorbitant privilege -- that moniker will be challenged. the saving rates in the u.s. are plummeting and deficits are mounting. we are seeing goals flip-flop. bethe dollar drops, you may one gold in your portfolio. at the bond market. of course, our people closing out ahead of the fed? will yield curve control come in? will it be muted?

i cannot see anymore prices. i am not going to bust in the blind because that is too dangerous even for me. let's talk about that comeback kid. log onto the pension fund and see how battered and bruised it still is. the s&p 500 -- the strategist who coined the model. theay no longer refer to march selloff as the bear market. the plunge is exceeding the conventional definition, it was too brief and it ended too strongly for a bounce to qualify. he called it the 66th panic attack since 2009 and the shocking rally claimed another bear. a legendary investor who warned about owning stocks that he now thinks was far too conscious during current market gains. the global economy will

contract, sending millions of people into poverty, manus. manus: let's turn to europe now because the french government will present a plan worth billions of euros to the aerospace industry. to the aid package, it will be aimed at the european jet any factual. the engine maker. and hundreds of french suppliers that have seen their business quite literally dry up overnight. let's get to our colleague and correspondent. good to have you with us. to support the aerospace industry now and what exactly can we expect? >> this comes as a part of many packages for these french, auto, and tourism sector. the auto plan a couple of weeks ago, 8 billion euros. the industry was next.

the newspaper is talking about potentially 10 billion euros for the aerospace sector. we should find out the details in the next couple of hours. this will come separately on top of the 7 billion euros of loan guarantees already for air france klm. it is unclear how much money will go directly to airbus. of course, we know that this will help suppliers. as many as 200,000 people in france. some of the suppliers are very strategic. they are also defense suppliers. we expect, for example, some aircraft orders guaranteed by the state. some extension of part-time unemployment subsidies and a specific investment fund for those suppliers. just like we saw with air france, the rescue package was

tied to a reduction in carbon emissions so we expect similar measures to be announced for the plane makers and suppliers today. we talked about developing some hybrid claims for the next few years. you.: good to talk to airbus had years of fully booked orders before the crisis. is that not nearly enough to compensate? caroline: we thought so, but it is not because obviously, the situation has dramatically changed with the pandemic, the band, and many airlines asking airbus and boeing to cancel or postpone their orders. remember last week, for example, they shoulds -- delay deliveries until 2022 or risk losing them as customers. 40% over theface

next couple of years. the long haul flights are not expected to rebound until 2023 and if you look at the orders and deliveries of airbus recently, they had zero new orders over the past couple of months and just 24 deliveries last month. deliveries foray as many as 60 planes. they could of course have jobs just like boeing is doing. caroline connan, our paris correspondent. thank you so much. the partner and co-chief executive officer sees a growing level of intolerance in this country as he discusses racial unrest and diversity in america. he spoke exclusively with erik schatzker on bloomberg's front row. take a listen.

eric: what makes me angry is not only the hostility and violence on ours been focused black population and the uncertainty that this creates for them and the fear that it creates. i am very angry about that and i am also angry that we tend to have a growing level of intolerance in this country. we seem to have a growing level tolerance -- tolerance for bad behavior in this country as it relates to underrepresented groups or as it relates to our black community. and we see it broader than our black community, frankly. obviously, that is a critical

issue and i do not want to distract from that but we see it as it relates to the rights and freedoms, for instance, in the lgbt community, for example. we see it in a number of places and we just have to do something about it. it is time to do something about it. so people in the streets, i encourage that. i applaud the protests. dohink it is part of how we what we do in this country. >> what are you doing about it on a personal level? what are you doing about it on a professional level? what is ppg doing about it? jon: number one, i am reaching out to my black friends and my black colleagues directly. i want them to know how i feel about it. i want them to know i am angry and that they have my support. >> i'm interested to know what you and the firm can do over the longer-term. how can you expect change? what levers can you pull is the owner of companies?

you are the private equity owner of portfolio companies. you exercise governance rights. you choose management teams. what can you do and what will you do? add genderative to diversity to all companies we control or have significant influence over and we added 75 women in the last 24 months to the boards of our portfolio companies. on this issue, we are also sending a message to our portfolio companies. we put out a note that describes how we are thinking about this. we have sent that to all of our portfolio companies and we are sending that to our lps as well. another example of how we can move the needle on this is i think you might also be aware that last year, we took a minority position in a firm that is black owned and black run that is an investing organization called harlem capital. they came to us.

we developed a relationship. we took a position in the firm. we helped them fund raise now. successful first fundraiser. the focus of harlem capital is to invest in black-owned businesses, black-owned companies, and women-owned companies, by the way. our money, use our capability, use our expertise to drive capital formation where it is vitally necessary is another example of how we are trying to move the needle on this. >> given that you have had this much success broadening the gender diversity of your portfolio company boards, will you do the same for racial diversity? will you insist that over time, you affect the change such that there is more visible representation on those boards just as there now is -- there are now more women? the culture and

orientation in our organization that this is expected and that we have driven this down into our portfolio companies and we have held our partners partnership the accountable, to make changes in the composition of a board. we include that, by the way, just as an interesting aside. we include that in the performance reviews of our partners at the end of the year so we are now expanding that to include other forms of diversity including racial diversity. we are doing that and we are beginning to initiate what is the natural, next phase of that program. that was the tpg partner and co-ceo. now let's get to the first word news. lockdowns across the world may have prevented .5 billion coronavirus infections according to the first peer-reviewed analysis of the impact of health policy.

it comes as the world health organization says people without symptoms passing on the virus is very rare. it cannot predict speculation about the prevalence of so-called asymptomatic trends nation. the central bank looks willing to play an active role in responding to germany's constitutional court according to testimony by christine lagarde. the court gave a critical ruling over the central bank's monetary policy but out until now, the institution has taken a backseat, letting the bundesbank take the lead in responding. democrats are proposing a sweeping police reform bill, hoping to turn the energy from nationwide unrest into concrete legal change is one key change, they want to make it easier to prosecute and sue law enforcement officers. a vote is planned for later this month. a new round of arms control talks between the u.s. and russia. senior officials will meet in vienna on june 22. the aim for washington is to enlist moscow's help. the white house wants three-way treaties to limit the stockpile of nuclear weapons.

the past, china has balked at talks. 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. manus. manus: coming up burton on the mend. boris johnson will talk to his cabinets, talking him through the easing of the lock down as the virus deaths fall. but will it be enough to turn around his sliding poll ratings? this is bloomberg. ♪

nejra: it is "bloomberg daybreak: europe." tom nejra cehic with manus buy. several gains for asian

equities. since the march low, but futures a study to negative today but you are seeing some positivity in the dow and nasdaq futures. 10 year yield moving lower. you are seeing a weaker dollar generally for a ninth day and certainly weaker against the yen. some short covering on the yen. oil in positive territory. boris johnson will use the u.k. lockdown today after officials reported the lowest number of daily deaths since frictions were imposed. the health secretary said the data meant the government can press on with plans to open nonessential shops on monday. the prime minister is under pressure from members of his own party to cut the two meter social distancing limit. benjamin jones is still with us. theirmarkets have taken bets on negative u.k. rates off the table. j.p. morgan seymore qe is instead going to be the tool of choice for the boe.

how are you positioning around u.k. rates? benjamin: we are feeling neutral at the moment actually. intoll see them going negative territory or deeply negative territory and that is more of a broad thought as well. negativea view that rates don't work and other policy tools have more firepower. fairly neutral on u.k. rates. i do not see them going into negative territory. you think the dollar rolling over and perhaps that narrative moving away from -- in the near term is the reason for sterling strength? is sterling strength just the story of dollar weakness for cable or do you sell into these rallies? how do you look at the near term strength of sterling? onjamin: i would be -- sterling at the moment but the currency of choice i would pair

that against would be the euro rather than the dollar. of a dollar story as opposed to a sterling story. you can see eurosterling moving higher. the thing you have to think about as well is that brexit is still sort of creeping along in the background. we have not spoken about that all this year. we are approaching obviously more milestones in the next month or so. it does not look like the u.k. government is going to ask for an extension. the risk of a no-deal is not zero at the moment. there are still little risks around brexit. it is being pushed to the back of the media lane because there is much bigger, more interesting stories to talk about. i think that is a key risk for sterling. nejra: absolutely. look, there was not much progress made on these talks between the u.k. and the e.u. startingand japan are

their post-brexit trade talks. if you are negative on sterling, you were telling us in the break you are not positive on u.k. equities either. people see a weaker sterling as a reason to -- the ftse 100. benjamin: all the way since the referendum in 2016. that has been a very large part of u.k. equities. my currency colleagues have on negative on the currency. certainly for the large-cap stocks, getting around three quarters of the earnings from overseas. oftainly over the course 2020, we have really seen that correlation between u.k. equities and the currency really starting to break down. part of that was an energy story. even with that, we are not really seeing the pickup in u.k. equities at the moment and i think it is a concern partly around brexit and that feeds

into general sentiment towards u.k. assets. financiale broader headwinds, spoken already in the last hour about concerns for financials. wherextends to the u.k. they are in large parts of the u.k. index. feeding toxit story negative sentiment on the domestic assets and banking sector errors with considerable worries for me in u.k. as well and it certainly is where the earnings profile is weakest. there is a warning of unprecedentedly tough times coming through. benjamin johns from state street, our guest host on the markets. as wetrades at 127.14, wait to hear what exactly is coming from 10th street. equity futures this morning -- year stocks futures up .5%. futures keep on trucking.

coming up, including more on small businesses, the fed extends its lending program to more companies. that is next. this is bloomberg. ♪

manus: it is "bloomberg daybreak: europe." i am manus cranny in dubai. nejra cehic is in london. to the fed, they are expanding the main street lending program which says will open eligible vendors soon and allow more companies to participate and lessen the burden on the banks. some of the main changes include deferred principal payments on loans for two years and lowering the minimum stick 250 thousand dollars from $500,000. the loan term has also extended to five years from four.

will it materially change or add to the momentum in the u.s. narratives? benjamin jones should be able to answer that question. main street lending. is this a complementary move of little impact or a major reset for financing main street? benjamin: i think it is a major step. we have not seen any of the impact of it yet. people can get out and actually spend that money. as soon as we get the lockdowns being lifted in a meaningful way and perhaps more importantly, individuals having the confidence to go out, leave the house, get out and about, then we will see how that money is put to work. there is an awful lot of money there. there is a lot of money sitting on the sidelines when it comes to an interesting perspective. you look at things like the savings ratio, that has gone through the roof. income levels have gone up, not

down, during this risk period because of that stimulus. consumers have the confidence to go out and spend that. when the lockdowns lifted, that can be extremely meaningful for inflation and, obviously, demand across the consumer sectors. i think it will be very uneven in the way that that is spent. it will be relatively reticent about the crowded places. they will be spending on goods and products and luxury goods. be an interesting trend to watch. nejra: benjamin jones, thank you so much for joining us. of course, we get the fed decision. the fed really should do nothing more. the job surprise might complicate the picture but the best thing would be to stay pat. that is it for "bloomberg daybreak: europe." up next.ean open is

positivity in european futures but s&p futures flat after the s&p erased its losses for the year. this is bloomberg. ♪ erg. ♪

nejra: good morning. welcome to "bloomberg markets: european open." i am anna edwards alongside matt miller in berlin. matt: today, the markets say is it too late to join the rally? missed opportunities but stocks continue to rise. europe points higher. the cash trade just one hour away. let's get your top headlines for you on the bloomberg terminal. targeted and