francine: back on top, the s&p 500 erases this year's losses, seeing an almost 45% rally from its march low. christine lagarde defends the ecb crisis measures as the world bank sees the worst local recession since the second world war. and staying in the air, embattled hong kong carrier cathay pacific becomes the latest airline to get a government lifeline in the wake of the pandemic, with a $5 billion recap plan. good morning, everyone. this is "bloomberg surveillance." i'm francine lacqua, here in london. tom keene in new york. i know we need to talk about the dollar and the rally, but we are also getting breaking in terms of data and the euro area and gdp is a bit worse than expected. first court of gdp shrinking 3.6% -- first quarter gdp shrinking 3.6%. it is better than expected -- i stand corrected. tom: it is important to point

out that it is calculated differently for early-morning american viewers. that is a stunningly bad number, whether it is a little better or a little worse. the way they calculate gdp in europe is very different than in the united states. i will let the pros do the math, gdpthat is a 12% negative based on the u.s. calculation. francine: we will have a look at metrics. i'm sure there is a chart for that. let's get straight to bloomberg first word news in new york city with retake a good. u.s. attorney general william barr has publicly contradicted his boss, president trump, telling the secret service that the president was told to go to a bunker in the white house during a large protest. president trump denied such reports, saying he went to inspect the bunker. a sleeping police reform bill -- party leaders knelt for almost

nine minutes in honor of the death of george floyd. the democratic bill would change the definition of criminal misconduct for police. as many as 25,000 stores in the u.s. could close permanently this year, almost three times as many as last year when closures set a record. from says most of the closures are expected to occur and more. the coronavirus pandemic has devastated the industry. horace johnson will set out his plan today for easy -- boris johnson will set out his plan today for easing the lockdown. since restrictions were imposed last month, johnson said non-essential retailers could reopen june 15 if the threat of the virus continued to recede. global news 24 hours a day, on air and at quicktake by bloomberg, powered by more than 2700 journalists and analysts in i amthan 120 countries,

ritika gupta. this is bloomberg. tom? francine? tom: thank you so much. equities, bonds, currencies, commodities. it is so important to frame out where we are, spx back year to date, not out to the record high we saw in february, but very impressive. we take a pause now. 30, futures,ive negative 3.07. the vix, 26.77. yields come in nicely from the .92 that we saw a day ago, maybe a day and a half ago. we are back to .82 on the 10 year yield. francine? francine: there was a bit of with risktum lost assets stalling after the historic rally, treasuries still

advancing. at is a good thing to look when we see a risk rally. 107.89.ently up shrinking less than expected, so down 3% down 3.6% instead of the 3.8 percent drop we had estimated. let's get back to the markets and also what we are seeing in the fundamentals. bed abouttraight to asia. -- that new bow he is coming up later. francine: -- tom: we are going to focus on the markets. strength in the equity market. the 53-day move harkens back to the rally of 1933. stay with us. from london, from new york, this is bloomberg.

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francine: good morning, aaron -- tom: good morning, everyone. bloomberg surveillance from london and new york. inre is a lot going on international relations and politics, but it is extraordinary to look at these markets. the correlations out there, the people who are making money come on board this huge rally, and we are really hearing from a lot of people, francine, who are

struggling here. you know we are going to hear a lot more in the coming months. off the march lows, we are up 44%. it is a 53-day surge -- no other way to put it -- and the thing called the relative strength index is out to where it has not been since the data was kept in 1990. francine: that is something that we need to look at, but also if you look at some of the credit risk out there, we need to talk a lot about high yields, and this is where you saw at the beginning of the lockdown and lot the concern. credit,of european junk or junk rate credit is increased. this is one of the most interesting aspects to what we saw in the last couple of days. the other story we have been covering extensively is the price of oil, so brent but also new york oil. it is fighting after saudi arabia decided to see some extra voluntary production cuts by the end of this month, but watch out

for anything to do with opec-plus. tom: there are any number of corporate stories out there, cathay pacific front and center today. lufthansa from a number of days ago. all this comes out from big companies adapting. one of those companies in the united states is general motors. she is the engineer from the general motors institute. there wonderful school. when i was a kid, it was a huge one in the midwest. here is mary barra in condition -- and conversation with david rubenstein. mary: working to have a minimal amount of scales -- of sales as we focus on other types of retail business and the customer for sure. it will have an impact, but not a huge impact russ, just because of the level we had gotten to from a rental car company perspective. >> what about electric cars?

our electric cars going to be a part of the future of general motors? mary: absolutely. right before the covid crisis dealers,ad investors, our employees, media through what we called an ev day, and we took them through a battery perspective, launching starts next year. the ltm battery platform, we will be taking multiple models off of that. and wethe gmc hummer ev, have announced that cadillac will be a lead brand for developing and selling electric vehicles because in the end, we believe in an all electric future. we believe the transition will happen over time. since we are a leading manufacturer with value and luxury brands, we need to provide market value -- we need to provide value for the market place. in my almost 40 years at general

motors, i think this is one of the most exciting times as we transition to electric vehicles. ordo you expect in 10 years 20 years, general motors will produce only electric vehicles, or some period of time in the future? mary: i think it will take longer than that. i think it will take place over a period of years and decades. there are 250 million cars in the u.s. car park, and when you think about different use cases, also affordability, and that is why we are working hard to make sure we are in a leadership position with battery technology. so that ev's are affordable for everyone. it will take a little longer period, but it will happen. >> i notice you have announced you are producing an electric van at some point in the future, to be 2021. will that replace automobiles, or is it a different part of what you're doing? say, ae have, i would limited business and commercial vehicles, and we see that as a

huge opportunity as companies look at what their target for -- at with their carbon footprint is and the environmental moves they are going to make. if they have any part of their business that is a fleet need, all electric meeting those needs will be very important, and we can provide a good value equation with the cost of ownership. we see it is a huge opportunity. >> today as you look at general motors and the overall u.s. economy, are you comfortable that the u.s. economy can come back and you can do reasonably well? i assume you will not sell as many cars this year as last year. mary: i think it is a little early to tell how the market will rebound. there is a lot of different factors. sellld -- we continue to even through the early months and weeks of covid, we continued to sell. it is starting to recover but we

are not back to a comparable week last year. so we think it will be down, and it depends i think on how successful we are in making sure we keep covid maintained and we don't have a second spike. so we are planning for a variety of scenarios to be ready, hoping for the best but also planning for something more conservative. barra.e: that was mary joining us to talk about the markets but also the fundamental economics of the world, is bhanu baweja. great to have you on the program. last week there were so many skeptics about the rally in assets. today mainly because of the u.s. jobs report that was better than expected, people say it is justified and we will have a better recovery than many people think. what is the what if? you worry about deflation? what do you worry about? bhanu: more than anything else, we worry about the labor market despite the u.s. jobs report.

nearly half of the jobs came from one sector, which is leisure and hospitality. gdp coming to fruit. i don't know if we can continue to expect that over the long haul. and low-paying, services that are very contact intensive. for -- take a long time the labor market could be hurting for a long time. in any given recession, the unemployment rate comes down 0.5 percentage points and that will take a long time to an marmon -- to normalize. suspicion is that the jobs market is a little bit weaker than the market currently believes. and i think these are reminders of that. we have an inflation figure in china that is

significantly low. is that just because of the price of oil, or is there something deeper and more sinister in the chinese data? bhanu: it is not just the chinese data. be significantly negative across the world, which is why investors are worried about a significant rise in inflation. that is the one thing they don't need to worry about, despite the fact that base money is going up aggressively, and global you have to ask a simple question -- what is the velocity of money? that is softening up. inflation is very closely associated with that. and much more modestly than the one-month wti, so inflationary looking at ave -- disinflationary future, there is a very strong political , it is difficult to

expect inflation picking up. so we are looking at a disinflationary future, which is why it is important for the markets as well. need inflation expectations picking up significantly. you need a weaker dollar. it is not obvious that all of this is coming through. francine: tom keene in new york -- tom: tom keene in new york. thank you for joining us today. i want you to address the morning zeitgeist, which is that we are so extended in the equity markets by conventional measures like rsi, or frankly by any interpretation of the greek letters. retail, fear of immersing out -- of missing out, and that we will crash when it breaks. is that what happens? risk of that is

increasing. let's focus on the s&p. the s&p is not the u.s. economy labor market. it is tech, communication services, telecom. home, all ofrom the health tech. that makes the s&p better than most of the market. listingr markets are along the same degree. i think that is where the market is getting a little overextended. you are absolutely right about the fear of missing out, but the volume has not been very high. the volume has not been very high. term,k for the very near it is up rather than down. but fundamentally, these levels of valuations, which are close to any realistic estimate of earnings, i think they are pretty stretched territory. to romannt to go

fridman of new york university come who has been absolutely hedgingon the recap of going on. people have to reset, re-hedge. how do you re-hedge without great expense into a market with this acceleration? good point. a very the way i think about it, all investors are thinking of explicitly or implicitly, equity and risk premium. when the market moves quickly, and people are asking themselves the question, what do i do with my money, do i market in in u.s. treasuries, or stocks, in the u.s. market? even the cost of re-hedging as it goes up, that is changing the

market. people have finally -- we don't think it goes too far. u.s.30-year yields, 10-year yields are finally picking up. that is leading to the question of fixed income. people will get better returns, and i think that is where many will be heading. but the importance of equity risk -- when risk comes down from 5% to 4%, you have better man for equities. 0%,when you get to 1% or there is a scramble, and that is what needs to bear everything out. francine: so what do you take -- i don't know if it is what do you take issue with, but what is the market maybe mispricing? a major hedge to the labor market front. i take issue with the interpretation that this is a

short and sharp enter placement. for many companies this will be a balance sheet problem, which is going to take years to resolve. it is not clear that many of these industries are going to come back with the strength they have had in the past, so the labor markets are not going to recover. i think revenue growth over the next two years will be -- even accounting for low credit spreads, you are only pricing in a forward multiple, which is extremely high. and therefore, if the reopening goes a live bit better than expected, when we find out and we get a reopening -- look at australia, look at new zealand -- these guys opened up a long time back. activity,easured looking at contemporary activity, at -45% on the year. this will take time. the face at which the -- the

pace at which the markets can normalize, and the pace for the labor markets and consumer sentiment -- i cannot emphasize enough how different the problem is in the recession for the labor market. this is a services recession, which means the labor market is going to be disjointed for an extended period of time. tom: this is a superb conversation. we will continue with bhanu baweja. we have been looking forward to this conversation, one of our themes through the day on "surveillance" is trying to recalibrate -- recalibrate these historic performances. robert doll will be here through the morn. -- throughout the morning. stay with us from london, from new york. this is bloomberg. ♪

ritika: this is "bloomberg surveillance." cathay pacific has gotten a lifeline in the midst of the freeze on international travel. hong kong's flagship airline announced a $5 billion government led rescue plan. of government will own 6% cathay pacific once recapitalization is complete. pioneer chesapeake energy is preparing a potential bankruptcy filing. once rival exxon title -- the

company amassed incredible debt due to drilling programs that came up with too little. that is your bloomberg business flash. tom? francine? francine: thank you so much. a lot of the focus will be on the better than expected figure out of the euro area gdp. a lot of the focus is not really about the rally, but maybe we have come to the end of the rally. , looking at dollar. tom and i talking about government bonds in the european periphery. they are flipping as the european junk rate increases. --ing up this is bloomberg. ♪

>> good morning, everyone. "bloomberg surveillance." we are having a wonderful conversation on some of the

market dynamics out there and it surrounds -- and the surround of this huge rally we see in equities.. you mentioned earlier, the ,ervice equity -- the service there are income statement dynamics. part of this is the balance sheet and part of the balance is costs next money to nothing. is the answer for in many corporations behind mass consolidation? >> i think that sounds right. at the minute, what corporations are doing has increased effort. you can see that in the high-yield market, so it this point, everyone is trying to and up as they come in that's going down. in the forward term, you should [inaudible]

there's a clear relationship between capex and uncertainty. it would be difficult for companies to engage in capex. basis, it's-looking something they are taking up right now. -- capexill remain will remain. expect the long-term volatility, likely to increase. this is not an r.o.e. event. i think the markets are going to be quite cautious for all things hiring and capex. tom: with where we are right now, the stuff we learned in disappears, whether

it is dividend discount model, whatever. it is. the fundamental pitting is share buybacks, dividend growth, and use of cash. do they drift away or come back with a vengeance? >> i think free cash flow will increase, tom. that's what consumers are going to want. are going to say more because of the unemployment situation. are saying this is a balance sheet problem. [inaudible] this is not new, but this is accelerating, as of many other trends that the data this pandemic. it is accelerating those trends whether it is globalization, intellectual

investment, or focus on free cash flow. i think those will be accelerated around the pandemic so investors will have that hand in cash. issuanceo growth, the in the marketing credit market have been [inaudible] francine: to oversimplify, do you worry about good companies in the spell of trouble because of a pandemic or do you worry about zombie companies, companies that maybe shouldn't deserved to be propped up that will get government support? >> i think that's doing -- the fed is doing enough to give good accompanying support. extending credit to potential fallen angels. these companies don't have major liquidity problems. risk of somebody, -- of zombie companies is quite real, but you may type one errors in type two

errors. you don't want to make the error of [inaudible] prop upmeans you zombies for a while, so be it. i think they will keep the purchases high enough financial conditions loose. some companies don't have major liquidity problems are now. that's why i think they can only provide dividend help. francine: talk to me a bit about emerging markets. probably be the biggest concern because their link to the dollar but also some of their health infrastructure could not cope with the overload. what is your take on emerging markets now that we are bit wiser about what exactly is

happening in the pandemic? init is still going up, and most cases it will come down moderately, but it is still quite high. as the number of cases increases, the mortality is shown. i should say the reported numbers. this has been found out to be a major public debt problem or em. [inaudible] they're not to have a major dollar crisis because they don't have huge debts to be paid. that public debt like south africa, brazil, cumbia, even india, i think that issue will be difficult for them to address -- because of weaker currency.

what i said earlier about the s&p, a sector of the s&p be more important than the company -- country, the same thing is true for north asia, taiwan, china, these markets are going to be reasonably strong because of tax supporting them -- tech supporting them. for the others it will be a hard case because of them underperforming. tom: this has been wonderful. a wonderful update particularly with the markets are moving. great to hear your thoughts in the surgeon equities. right now, in new york city, with our first word news is riddick a group to. >> some republicans in congress are questioning the need for more pandemic stimulus because of the surprise rebound by u.s. job markets. homemakers will have to decide whether to renew the extra benefits for employees.

weekmericans, the $600 per expires july 31. joe biden has slammed president trump handling of the economy --d the president accusing trumpit of turning his back on the middle class with an agenda that helps the corporations and wealthy. --l was set at's high as bail was set at as high as $1.25 million for the officer -- x officer in the death of george .loyd north korea shutting off communications with south korea. kim jong-un's regime said south korean authorities carried out hostile attacks. referring to leaflets critical of kim. they were attached to balloons and floated across the order by anti-north and activists.

global news, 24 hours a day, on air and on quicktake on bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. i ritika gupta. am francine: next, we talk with chatham house u.s. head and protests. this is bloomberg. ♪

surveillance." good morning, everyone. london and new york. row, the biggest move since 1933. we will pause as we have the

head of ubs with us. we look at the politics of america, emotions over the last few weeks. there's no one better to do that than our guest from chatham house from london, looking at the american political scene. leslie, the president has made -- has been remarkably i. he did a photo op yesterday, gathering with police officials and such, and i really thought vice president biden took the opportunity to fill the news vacuum with maybe his best day in ages. what are you learning about the biting campaign? >> biden has used this moment to come out onto the national agent each out and talk about race and talk about health in the pandemic and the economy. i think it has been a turning point for those who have always been worried about what words the vice president will use.

he thought people surrounding him and help that she thought people surrounding him and helping them out, but it is true that president trump is standing back. the moment at the white house rose garden church nine days ago, eight days ago now. there are rumors he might make a speech about race. right now, the tide is turning, and uncertain -- and i'm sure president trump is uncertain about the impact on the polls, and [inaudible] tom: one of the things that i think is obvious here and i think it goes back to reagan, you have the republicans winning in the primaries but if you want to when you have to go moderate. this will certainly be testing both candidates. does joe biden have the ability to go moderate in the sense, who else are the liberals gonna vote for? >> i think this has been the ongoing search for the

democratic party. joe biden is moderate but he wants to include the progressive wing of the democratic party, which is incredibly important, especially right now in this moment in america where we have unprecedented tests uniting many people across the country, certainly bringing about the progressive wing. he also has to speak to those people who want to see stability, the rate of infection coming down, the economy coming back, jobs coming back is absolutely vital. there are so many high-stakes concerns, multiple crises facing the next president, whoever he will be. there is certainly a very significant question about who joe biden will of as his vice presidential candidate, and to that will speak to erie will he choose someone that speaks to moderates, progressives, african-americans who can unite the concern for economic

rehabilitation of restoring the health of the economy and of the people but really addressing very critical and very divisive issues of race, race relations, and police were on that are absolutely top of the agenda across the united states. it is an historic moment. francine: leslie, when do we know joe biden's running mate and who will be the ideal candidate? are there candidates with whom by his side he canst lose the election in november? >> -- can't lose the election in november? >> i think we are looking at early august on when i didn't steam said they will announce the candidate. a lot of people suspect it will be an african-american female. he already confirmed he will appoint a female as his running mate. looking at the atlanta mayor, the florida congresswoman as two candidates.

never really taking -- getting the amount of attention. it just shows you how much things can change. three weeks ago, we were in a very different place, talking about hitting the 100,000 death mark, tragically, in the united states. now, that is important that america is opening up and opening up with test. that has great relevance for who vice president biden will choose as his running mate, but i think we'll know in the next six to seven weeks. that is a very serious question right now. francine: do you trust the polls? in the past, we weren't sure. given what we are seeing, does it make sense or or are we measuring peoples, i don't know, anger? >> this is the age-old question.

people in the u.s. and u.k. let us to believe that we couldn't trust the polls. over the last many years, polls have told us quite a lot. they continue to change, but as we know, president trump's approval ratings have not changed very much in the course of his presidency. these around 41% now, but biden 70% nationally. it's interesting to break down some of those polls with republicans strongly supporting him on the his response to the economic crisis in america, but not strongly supporting him, nothing to be said to the statement extent -- to the same extent when handling the response of the brutal killing of george floyd. once you look at the public attitudes which have really moved in the last few weeks, and they are affecting how people feel about the president.

the african-american vote is strongly in favor of joe biden, the latino vote as well, the young vote. president trump holds strong among white voters, especially the base, the white not college-educated. one thing interesting here, because the protests are taking place not only in the cities but taking place across smaller towns, more conservative areas, especially in places like pennsylvania. votersyoung to concerned turning out to protest. that is the demographic because they are young, but they have moved toward the biden side of this contest. , thank you vinjamuri so much with chatham house this morning. we have more to come. daniel juergen will be on in the 10:00 hour i believe. he will look at the commanding

heights, the view from riyadh. please stay with us. this is bloomberg. ♪

>> this is "bloomberg keep thence." i'm group to -- gupta.ka this is a move that aimed at lowering cost after pg and the exits bankruptcy. their company will lease its building in oakland with an option to buy. priced shares above marketed range and raise $468 million in ipo. this includes general catholic armors. than -- valued at more need to revive its favorite commercial from the 80's with the tagline where's the beef. american meat supplies have covered after the coronavirus

forced factories to close. that disrupted wendy's supply chain and had them focus on chicken. wendy say they are back to normal and has a full list of burgers on the menu. that is your bloomberg business flash. , and francine? -- tom and francine? francine: we talk about the risk of not deploying capital vast enough for the client. a representative from one of the biggest equity firms talked about the covid pandemic impact impacts on bloomberg front row. clearly, we have had something happen here that we have never had happened before. in certain cases, revenue has stopped inside of these countries -- companies. first, one of the near term implications of that and that generally follows around liquidity? how much liquidity does a

company have and what are the near-term measures to a liquidity? that included furloughs, layoffs in certain situations, various forms of shutting down the engines, if you will, in order to extend the runway of these companies. >> those are tough decisions. >> very tough decisions that involve people, and management teams are loyal to their ease, as are we. -- their employees, as are we. the health of the company in the long run is critical, because those businesses employ people, valuebusinesses have within our portfolio and on behalf of our investors. our priority and focus has to be survival of the businesses and survival of these companies. a second step is what i mentioned before, how do you reduce the burden? we've taken a number of

actions there. the third step is, is there more liquidity that we may have to provide an investors, would we have to provide additional liquidity to bridge the gap if you will? we have done that in a couple situation so far and we may continue to do that. as you say, at some point, we --e to evaluate rather whether something will survive because there may be fundamental changes on the other side. >> are we far enough along into this that you are having to make those really difficult -- >> by and large, i think the answer is no, we are not. take the cruise business as an example, viking cruise lines is an important business of ours. you are in as good of a position as i am. will people go back to cruises?

the answer is probably yes, they will. clearly, people will not go back to cruising the same way they were or in november and december, ok? sometime in 2021, i don't know. it depends on what happens with respect rings like treatments for the virus, depends on their will also be a vaccine. tpg --e: that was the we will have plenty more on what's coming up in the markets. markets we saw, a pretty big rally over yesterday. it's not really filtering through as to what we are seeing in europe. we are spending time looking at markets and time looking at -- the one thing on my mind is what's happening with these european credit markets, tom. tom: let's take a look at the

markets with -- we will take a look at the markets later. oil is sliding back from the $40 level. in our next hour, we will really focus in again on these markets, the stock markets. the 53 day move is extraordinary. can you imagine the number of people left hind by this truly historic rally? please stay with us. from london, from new york, this is bloomberg. ♪ when you say what you're in the mood for,

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tom: this morning, the fear of being left behind. we move on from the gloom of march. what will day 54 bring? so far, the greatest surge in the stock market since 1933. call it fear of missing out or perhaps fear of selling first? reopens.city we have 14 states and puerto rico seeing record cases of covid-19, from alaska to utah. it will test the -- america will test the swedish experiment. trump and biden, they agree to agree. they will not defund the police. -- says this is "bloomberg surveillance." i'm tom and francine is in london. we are looking across all the asse