♪ nejra: good morning from london. i'm nejra cehic. these are the top stories. he was futures are in positive territory after wall street's worst day in months. fears of a second wave of coronavirus added to a dovish jay powell. treasury yields regained some pounds. crude oil sits lower. the focus is on houston as the fourth biggest u.s. city says they may be approaching the precipice of disaster. steven mnuchin says it cannot shut down again.

ad the u.k. is to planning custom regime at its border. michael is expected to rule out extending the brexit transition period today. welcome to daybreak europe. we saw quite a drop, the stop and 12 weeks in the s&p 500, declines of almost 6%. somehow they are saying it will be normal. you see consolidation, gain in futures following a drop like that. what's it about jay powell? was it concerns about a second wave? or was it because of bullish positioning and sentiment getting a little too stretched? whatever it was, you're seeing the selloff continue in asia today, about 1% or more in u.s. futures. the european futures firmly in the red. we saw some dollar strength in yesterday's session, which speaks to studying somewhat today, a drop of almost six basis points in the 10 year treasury yield. we move up 2.5% today, and oil

set for his first weekly drop since april, being swept up in those second wave fears. as i was saying, he was stocks saw their worst selloff since march, with almost $2 trillion erased from equities. what drove the switch and sentiment? -- in sentiment? >> we shouldn't be surprised by a reprieve after a rise. >> the facts we are seeing ebbs and flows shouldn't come as a surprise. >> today we got some statistics about infection rates in united states that caused real concern. >> the conversation has shifted from this economic reopening to, is there a second wave? >> on top of what we heard from jay powell, really changed the mood. >> it's also attributable to sobering comments out of the fed. >> chair powell put a dose of cold water on what has been happening. >> i don't think this can be blamed on the fed. i think more likely, we got

lulled into complacency on the virus. >> it could, in fact, be a healthy thing that the market drifts a little bit lower. >> i don't think it's that surprising we're taking a step back and i wouldn't think this is a sign of panic either. >> this is the reckoning that a lot of us were waiting for. we waited a long time. signs continue to mount on a possible second wave, houston having a new lockdown. for more, annmarie hordern joins us. great to have you with us. walk us through these concerns about a second wave and how different states are approaching it. annmarie: it is very interesting, because here in new york, in new york city just started to reopen, new jersey reopening, and these were the hotspots. and now, we are seeing pockets around the united states have these concerns and nutrients with covid-19 infections.

california, arizona, florida, and texas. texas is one to watch because houston is weighing whether or not it will reimpose lockdown orders. they're looking into opening up this hospital that was never used for covid patients at a football stadium as far as cases expand. and the highest-ranking official, judge linda hidalgo, an official harris county -- houston is part of harris county -- and she says we may be approaching the precipice of a disaster. it's almost a tale of two cities. new york and new jersey starting to reopen, but others having to weigh if they have to go back into lockdown. nejra: it is interesting. we were discussing this yesterday. there's questions over whether the second wave is linked to easing lockdowns, because the state of georgia is one of the earliest to reopen and that hasn't seen the same trend as houston seems to have be seeing.

even if the virus reemerges, treasury secretary steven mnuchin says the u.s. can't shut its economy down again. why, and how is that exactly going to work? annmarie: i must think we're -- almost think we're going to have the same debate, when you had many debating whether or not you should be shutting down economies due to the impact on people's livelihoods. steven mnuchin made his comments yesterday. we can't shut down the economy again. he says you would create more damage, not just economic damage, but medical problems that can be put on hold. this is what the secretary treasury was saying. he said a shut down this time could be avoided with cases surging if you have covid testing and tracing. he says officials now understand more about how to contain this virus. this is going to be a debate if we see cities having to take that measure and put these stay-at-home orders and shut the cities down in new lockdowns.

nejra: president trump was in texas yesterday, and he is planning to get back to campaigning soon, even with the pandemic. annmarie: we know he is eager to get back on the campaign trail. these rallies for him are the lifeblood and the heartbeat of his 2016 campaign. campaign event next week in oklahoma, and they're telling the supporters that come that they need to waive liability if they contract covid-19. so by attending, you agree to not hold the campaign, the event space, employees, volunteers liable for any illness or injury. rncop of that, remember the supposed to be held in north carolina, but the governor couldn't guarantee they could lift social distancing measures. the rnc announced they would be moving key events to jacksonville, florida.

florida is one of those pockets the data is showing an uptick in trends related to covid-19. both of these measures weigh some political risk if they coincide with more cases and more deaths linked to the virus, especially as we have no vaccine or no proper treatment on the horizon. this is one to watch in the next few months. nejra: annmarie hordern in new york, thank you so much. let's get to the first word news. the global economy is recovering, more so than expected, as there are lingering scars from the coronavirus pandemic. that's according to the international monetary fund. the imf is set to release its latest growth. it is likely to be worse than contraction predicted in april. the is planning to introduce soft board-checks with the eu, deal or no deal. the measure is temporary and will avoid hitting businesses already suffering due to the pandemic. the new policy comes as britain and the eu step up the pace of trade negotiations.

boris johnson is set to hold a call with the commission president on monday. hertz is asking a judge to let it take advantage of a surge in its stock by selling up to $1 billion of its shares. banking companies arrived out, but hertz has seen a rally. it is on optimism on the economy is going to rebound. renault is expecting ferocious competition in electric cars, that warning from the chairman there's a flood of chinese models coming to the continent in a market that is increasingly crowded. there comes as they roll out more cars in the midst of a deep slump. global news, 24 hours a day on air and on quicktake by bloomberg, powered by more than 2,700 journalists and analysts in more than 120 countries. coming up, significant scarring. that's with the imf says the global economy will be left with as a result of the pandemic. more on that next.

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nejra: this is bloomberg daybreak europe. i'm nejra cehic in london. let's get a quick check of market action, the selloff continuing in asia, playing catch-up to the u.s. session yesterday, s&p 500 dropping 6%. the was futuresb;yr positive. we could see consolidation after the selloff. european futures negative. the 10 year yield edges up after dropping yesterday. we are seeing some yen weakness, along with dollar steadiness following dollar strength in yesterday's session, and oil heading for its first weekly

drop since april. the global economy is recovering slower than expected from the pandemic and will suffer significant stars -- scars from the experience. the chief economist says economic growth projections out --24th -- june 2 fourth june 24 or worse than april. joining us now is the head of fx strategy at bnp paribas market. sam, great to have you with us. there's a lot of things the market is weighing up at the moment in terms of risk sentiment. we've got the concerns of a second wave. we've had a dovish jay powell earlier this week. and then we get the job claims -- jobless claims data. putting all that together, what are the prospects for euro-dollar? nejra.od morning,

we think the prospects that it will continue its recent rise. as you correctly pull out -- point out, there are a number of things at play, but we are focusing on the fed. what has jay powell told us? will form into yield curve control later this year. they are keeping a cap on long and yields, giving it has put a flaw under qe tapering. the fed is also injecting sufficient liquidity, such as the market rate reflects policy rates. in our view, this is really a recipe for brought dollar weakness, particularly when we s overer the dollar' valuation and the market is not position for a dollar decline. for euro-dollar specifically, we also have the added component of europe and the news flow there has been more positive than expected. nejra: ok. that's interesting what you say

about dollar weakness, sam, because others might argue that if those fears of a second wave materialize even further, the market takes on more of a risk off tone. we could see dollar strength. it's exactly what we saw yesterday, bloomberg dollar index jumping 1.2%. do you not see that as much of a risk as we head into the second half? the high currencies against the dollar, i do see as a risk. zealandisk for the new dollar and emerging-market currencies, as well. in my view, euro-dollar is different. we need to remember the eurozone is a large current account surplus region and that should typically employ currency outperformance during periods of risk off. now, that relationship hasn't held true in 2020. reason for that is risk off has

correlated with widening out and the market pricing it's downside tale to europe. if we're in a state in the world where the combination of the coordinated fiscal and monetary response from the eu recovery fund, combined with the ecb's increase in its flexibility and a playes program, is that's going to be difficult for the market to price widening, even during episodes of risk off. we'd argue the euro will exhibit characteristics more closely to the yen rather than other competing currencies. to a degree, we saw that yesterday as well, with the euro proving relatively stable inw a 6% -- in what's been decline in global equity markets. i think for the dollar, correct

expression is long euro-dollar, short allergan -- dollar-yen, rather than short -- nejra: how interesting. you think the euro is going to start behaving more like the yen. what of the yen then, sam? re: forecasting more yen strength into the -- are you forecasting more yen strength? sam: we are. the target is 105, and we think it can break 105, perhaps retesting the low as we saw, just above 100 earlier in 2020. quiterket has been saturated with the end this year. it has failed to perform to the extent that has been expected even though it is one of the strongest performing currencies today, and in fact in the g10,

this dish the second strand is performing. when forward, what is going to be key, there has been a number of temporary factors that mitigated yen strength, which beeno been elite -- now alleviated. it is in the march rally in dollar-yen. and since the end of march, even if it has been alleviated, japanese foreign equities has been very large. we've seen that in the data. we believe that flow will now decelerate, which should set the stage for dollar-yen signal. nejra: right. and sam, just overall, how do you think the market no views the second half of the year -- now views the second half of the year? we went from the v-shaped recovery being the consensus, but despite all that, we saw the 40% rally in the s&p 500 for the march 23 low, and now we start

to see that pullback little bit. there are various reasons why that pullback might have happened yesterday. it doesn't necessarily mean we are at the beginning of a downtrend. but do you think the market might get increasingly more negative into the second half of the? -- of the year? sam: i would doubt that the market already has been very negative, but unfortunately the market has been wrong on the strength of risk assets. to your question by bringing back our proprietary analysis at bnp paribas, and what it shows is that the strength of currencies thus far has reflected more of an unwind of shorts rather than the market building longs. we'd argue that although we have seen a strong recovery in currencies like the sterling dollar and a number of emerging markets, it reflects more of the

very bearish position rather than an active position to become long those characters six, if you like a reduction of -- characteristics, if you like a reduction of overweight. that type of dynamic says there is a lot of complacency in the market to, if you like, regress risk on. and we see that yesterday. if you look at dollar-yen or kiwi yen, those crosses were at levels higher than pre-covid levels just a week ago. and the retracement has been chart, which i would argue suggests the market is willing to engage in risk on trades than it is with risk -- risk off traits that it is with risk on. nejra: that mirrors what some people say. sam stays with us. as u.s. cities state -- protest police brutality against black

people, democrats on capitol hill introduce a reform bill that could make it easier to óprocess -- prosecute and sue lw enforcement officers. so much stronger if we can work in a bipartisan way. the center is we -- senate is weak, but nonetheless, a recognition of change. i leave that to the distinguished chair of the black caucus, as well as the chair of the clan subcommittee of the judiciary committee, working with jerry nadler. i'll leave it up to them to have their interactions with the republicans in the house, as well as in the senate, and hopefully with the white house. relatesve an issue that to qualified immunity doctrine that protects some police

officers found to be engaged in misconduct from any, shall we say, exposure from families that are infected or lawsuits. so that is one area that is perhaps an area where we'll have some differences. wel'll be able to find common ground. amerco people deserve that. american people are expecting it. american people are watching. we see you. we've heard you. we're listening. we're going to do something about it. that was the question i was asked by george floyd's brother when he came to testify before the judiciary committee in the capitol. he said i have one question for you. will this become law? what makes you think so? what's different now? what's different is the complete

public awareness of the injustice of it all and the complete public outcry for change. >> any of us who have seen the video, not just george floyd, but also other instances of police misconduct, know that there are some police that we have to correct. we have to get rid of them. we have to amend their behavior. the same time, the vast majority or doing the best job to their ability. how difficult is it to police the police, but not be seen as undermining them and being anti-police? >> i think that most of the police officers are conducting themselves in a way that could be viewed publicly as a responsible do not want to be painted with a brush of some bad apples that might bef there in the mix. isagain, policing the police a responsibility that they have. but also, i think that we have

to recognize that there's some racism that has to be addressed in our society, as well as within our law enforcement community. and when we can rid ourselves of htat, we'll go a long way to having justice in our policing. >> are the police unions a help or a hindrance in the form of policing? >> i had a conversation with the president of one of the police unions, and they put out a very positive statement about our legislation. we didn't know what they might say, but it was very, shall we say, open to what we were proposing, ready to have the discussion. and again, as you say, overwhelmingly, police officers are there to protect us. i think they see their role as guardians, not lawyers, and we just have to hope for the best in that regard and invite them to the table so they can be part

of the discussion. some places it's different. some places, some of the union officials have been very, shall we say, more than -- more protected than they need to be of bad conduct. we have to make those distinctions. pelosi,hat was nancy speaker of the u.s. house of representatives. coming up, light border checks. the was has come up with a new border policy for the union -- european union whether they post a brexit trade deal or not. more on that next. this is bloomberg. ♪

nejra: this is bloomberg daybreak europe. i'm nejra cehic in london. sam is still with us.

sam, let's continue the conversation we were having earlier around risk sentiment. we talked about euro-dollar and you talked about it in the context of for the dollar based on coronavirus, and also the fed. but what about the eu recovery fund side? what impetus will that give to the currency? fund stillcovery faces tough negotiations to get it over the line. there is implementation risk, fisher. -- for sure. but the key point from our perspective, the parameters that have been established, there is a deal room for adequate compromise. i would argue for the euro to participate in broad dollar weakness, it just has to be good enough. it doesn't have to be a fantastic recovery fund plan. it just has to be good enough to stop the market pricing systemic risk.

that will be what we get, which will be euro-dollar. nejra: we'll have to leave it there for now. sam stays with us. coming up, we talk about oil, first weekly loss since late april. this is bloomberg. ♪

nejra: from london. "bloomberg daybreak europe. u.s. futures turned green after wall street's worst day in months. treasury yields regained ground. the focus is in houston as officials in the fourth biggest u.s. city say they may be approaching the precipice of disaster. stephen mnuchin says the nation

cannot shut down again. a light touchn customs regime at its border. losses extending in the asian session. losses to the tune of almost 6%. vish commentsdo couldf ticked that off q4ask whether the pullback was necessary even the rally we have seen previously. stretched sentiment. the question is whether this continues. see the dollar strengthening yesterday. steady today. up by three today. there we go, we touched the 70

handle. oil weaker and heading for the first weekly loss since april. that is amid fears a second wave of u.s. infections could derail a fragile recovery. stockpiles raising concerns about excess supply. what a run we had for oil before the pullback. how does it impact your commodity strategy? >> when we think about the domestiche vulnerabilities very immensely. even for oil producers. companies sucht as saudi arabia and brazil, they have substantial reserves to navigate vulnerability. in contrast, when you look at an

area like columbia, they could face some difficulty. they are lower from here. loses.ryone benefitntal importers from this pullback we are seeing. we think this is more a function of sentiment rather than idiosyncratic factors. we think this is likely with us. interesting. in terms of the reaction we have seen an emerging market currencies, a little bit of a pullback. it was generally currencies being swept up. outlook for

currencies for the rest of the year? as you are saying earlier, when to the g10, what you are seeing and terms of the move up. thanding shorts rather adding longs. what does that mean for the e.m. spectrum? >> an important distinction i would argue is valuation. several high data currencies have already gone back to the very close levels where they were pre-covid. it weakened more sharply and quickly in the initial selloff. the view is the recovery we have seen and the past three or four weeks!rñ is likely to persist further. the necessary condition for that to continue his flesh dollar liquidity. the fed ensuring we do not have

funding programs. we think that backdrop suggests performance. rugby that, we expect the there was a short dollar cma cmh recommendation. >> that is even weird, that act drop of trade tensions. interesting you have moved to that. i wonder what you are doing around the u.k.? soft going to introduce border checks. that is to avoid adding burdens to u.k. businesses. that is what we learned overnight. there might be no extension to the deadline,

negotiations happening in december. we are not progressing too much when it comes to these brexit negotiations. it seems to me the fishing rights is a sticking point at the moment. how bullish are you in sterling right now? >> we are not bullish. i think brexit is an important input into that view. the meeting coming up on the ath of june could prove potential point for a political reset. the base case is we do still get an extension to the transition this year. when we combine the brexit uncertainty with what i believe you correctly point out is going to be poor, slow economic

coverage, we think gdp by the end of next year will remain beneath the level it was at last year. when we combine that with the largest deficit, we think it suggests sterling is vulnerable. >> i did not hear the last bit. it suggests sterling is what? >> is vulnerable. >> vulnerable, ok. how exactly would you trade that right now? at against the dollar? earlier, you were saying you see some weakness. would you rather be trading it against the euro. against the euro is the

correct expression. or perhaps against a basket of multiple currencies. diversify the correlation to that trade, risk sentiment. interesting to look at the gdp data we have for april. any monthlyeat figure with a handful of salt. month of first full locked down in the u.k.. it is well embedded within expectations. the key thing is the shape of the recovery. we think that is going to be selloff. you for joining us,

great to have you on the show. recoveringeconomy is more slowly than expected. that is according to the international monetary the imf set to release growth projections. the u.s. cannot shut the economy again, even if there is a second wave of infection. that is according to even mnuchin. he said shuttering again could just cause more damage. he also, he said, it will not be necessary. contact tracing is improving and officials have a better understanding of how top6 contan an outbreak. houston may be approaching the precipice of a disaster. the warnings highlight the danger of a second wave of infection be in the initial hotspots. the virus has killed 113,000 americans. grubhub over suing

the cancellation of a five-year deal. they declared it invalid, fighting yum. theyuit comes a day after agreed to buy grubhub for $7.3 million. powered by more than 2700 journalists and analysts and more than 120 countries. we discussed the reopening of european football. this is bloomberg. ♪

this is bloomberg daybreak: europe. return to action in an empty stadium. the spanish top flight is the second major european league to return after they lockdown. the french league is the only of the big five that called off competition. the french government's decision was a mistake according to log president.liga's >> when he said he was going to suspend the competition, we thought this was a big error. they were anticipating things at that time. nobody knew what was going to happen. demonstratedave the european competition could go back.

know if it is for health reasons or other internal pressures. damages this season, that is the first thing we are worried about. if we did not start the the loss in ticketing income, it was one billion euros of losses. competition,ed the without people pour behind closed doors, we are talking about 400 million. >> what was the cost benefit details you looked at? there are different types of financing. financingns havel? been spanish foot all. we have an economic control of

the spanish club and that is very important. beeninance market has financing. they have access to others offering finance. today, i cannot say exactly that --nish football has got needed to go and finance the deficit. the clubs are very aware the needs to be financed not just by loans but they have to reduce their expenses. i think we help them with financial control. general, i think we are not going to have a big problem with the finance. in spanish football. >> joining us now is dan jones. great to have you with us.

we are seeing a comeback of football to some extent. can we expect the same revenues without fans in the stadium and games continuing in the normal way? >> it was interesting to listen to the situation in la liga. were looking at our numbers in the premier league, we were thinking if the premier compare the 1920 season as it is now going to turn out versus the 1920 season think there is one billion pounds. the 20 financial year. about half of that is permanently lost. the majority is deferred into next season.

ordinarily, you have a situation where the financial years matchup closely. this year, you are going to see a sharp dip. we think we are going to see a sharp v-shaped recovery into 2021. the courseng to have of multiple seasons in one financial year. we think we will see record revenues for next season. what that reflects is the critical importance of money. even in an empty stadium was a crucial thing. to be able to fulfill those contracts. >> you talk about a v-shaped recovery. the fact revenues will be deferred. the fans are going to want to watch football as much in an

empty stadium? not the same experience. just on that point, do you think they are going to be able to get as much revenue from people wanting to watch in a different environment? >> yes, i think we will. what we will see with the audience is what we are always bundesliga.een with one thing that has been evident during the course of the pandemic is the extent to which people miss the enjoyable parts of normal life. the things that make life worth living. it is not as good to watch a game in an empty stadium. but compared to what people have been used to for the past three months, it will feel like a great occasion when football is

back available on tv. i think we will see strong audiences. i think broadcasters will be happy. everyone wants to get back as soon as is safe to do so. from watching the games broadcast from germany, they toe done a very good job feel as good as it can be. >> we showed a graphic in terms ì(lc% let me talk about merchandise. i don't think you are necessarily going to want to buy as much merchandise. how does that figure into your projection? is a small percentage of

the football club business. it is very visible. if you compare it to broadcasting or sponsorships, it is a relatively small part of most business models. , ile it may be off slightly don't think that will have a big impact on the clubs. the critical thing is getting the game back. fans back inng stadiums. about revenue in your report. europeannd within football leagues. you expect that to be exacerbated by the covid pandemic. who do you see as winners and pandemic and a>> going into the --ong position in terms of

the narrative sometimes is the top is rich. there leaving the rest behind and the rest are getting poorer. the issue has been phenomenal revenue success. like no other industry. the other half of it has been they have failed to control costs. that is the key challenge facing football. i think the current crisis makes it even more important. we are seeing positive steps in that area. >> great to have you with us. really interesting. thank you for joining us. coming up, nike takes a knee.

juneteenth has made a paid holiday. we will look at paid responses to racism next. this is bloomberg. ♪

this is bloomberg daybreak: europe. the latest move from corporations speaking out about black lives matter, a #that grew into a movement. it began in 2013. that is when a neighborhood watch volunteer killed trayvon martin. an activist wrote a facebook -- a friend turned it into black lives matter. it galvanized the movement.

protests in ferguson and new york were followed by protests and other cities. black lives matter has no formal agenda. policeers want to reduce brutality. joining us is jennifer, our reporter. thank you for joining. what sort of corporate protests have we seen? >> it has been really interesting. these companies are realizing putting out a statement is not showing their solidarity in the way consumers want to see it. they want to see commitment, long-standing commitment to the black community. one of the designers i spoke calledarted this pledge the 15% pledge. she is calling in big companies like whole foods and target and nordstrom's to pledge 15% of their shelves to black-owned businesses.

-- actually announced that was the first company to sign in. others toting for sign the pledge. it is important for companies to remember consumers are watching and they want to see commitment in long-standing forms. they are not afraid to call these companies out. >> just some data about some calls to defund. >> defunding the police, it is something we are going to be watching up until the election. it is important for people to remember, activistsyd are not calling for a complete abolishment of police departments. they want funds to be redirected back into the community. taken from police departments to go into things like housing and mental health support.

lawmakers perform their own -- >> we have run out of time but .hank you to our quick take you doing okay?

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>> good morning. welcome to bloomberg markets european open. anna edwards. >> today, the markets say, was that just a blip? stocks and futures in their longest losing streak since march. pointing higher after a big drop in stocks. let's get your top