♪ francine: sunak's spending plan. the u.k. chancellor set to unveil his measures to reinvigorate the u.k. economy but will it be enough? o.e u.s. kisses the w.h. goodbye. cases in the u.s. approach 3 million. america may target the hong kong dollar. top of president trump's advisors want to undermine the currency's dollar peg to punish china for its recent moves.

good morning, everyone, and welcome to "bloomberg surveillance." this is what the markets are focusing on. partly, the number of infections rising in the u.s. but partly also what we are hearing from economies in europe reopening. european stocks sliding for a second day. we did lose a bit of momentum in this equity rally in the wake of damage caused by the pandemic. hsbc slumping after donald trump's advisor proposed a move to punish banks in hong kong and destabilize the currency peg to the dollar. and goldng below $41 trading near its highest level since 2011. let's get straight to the bloomberg first word news. >> good morning. the white house has made good on its threat to leave the world health organization. the trump administration has sent a letter to the agency giving it a one year notice it plans to quit. president donald trump says the international body has been too

deferential to china in its handling of the pandemic. the move comes as virus cases in the u.s. near 3 million. some advisors to president donald trump want the u.s. to undermine hong kong's dollar peg. the proposal has not gone to the president or his most senior aide yet. it comes as the administration is considering how best to punish china over moves to chip away at hong kong's political freedoms. civil rights advocates have criticized facebook after a meeting with top executives, including ceo mark zuckerberg. the groups say the social network is not taking demands to combat hate speech seriously. one set of facebook treated the hour long video conference like a pr exercise. facebook says it wants its platform to be hate free but knows that it will be judged by its action, not its words. the european central bank will likely keep policy unchanged at its next meeting after the

massive emergency stimulus helped to calm markets. president christine lagarde said measures from the central bank have demonstrated their efficiency and effectiveness. the governing council's next decision is in just over a week. global news 24 hours a day, on-air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. i am leigh-ann gerrans. this is bloomberg. francine? francine: let's get straight to our exclusive interview. the u.k. chancellor is set to unveil a 2 billion pound program to pay the wages of more than 200,000 young people. with britain immersed in possibly its deepest recession in the hundred years, rishi sunak will set out a package of measures to help recover. -- from aberdeen.

what would be good for companies? what would be good for markets? i think it is important to set this in context that we get expectations in the right place. i always think about, when you are looking at fiscal policy, there are three phases to fiscal policy when you are dealing with a crisis. getting the initial levels of support. been doneat has particularly well by the passenger and tomorrow -- and to some extent, the central banks providing liquidity. that fades at some point and that's where we are and that's where you need to start putting in place stimulus that reinforces the rebound from the lows in economic activity. what markets and businesses will be looking for today are measures that

reinforce the strength of that rebound in activity. pretty we have seen some good detail that suggests that either they are doing the right thing -- that they are doing the right thing. the third stage is about how you sustain that recovery in output. that is about a broader framework where we need to think about the tax incentives, the incentives to invest, the way in which macro credential policy maps in with fiscal policy. i doubt whether we will hear that today. i suspected that is further down the track. we will be focused on the details to make sure that the rebound in output that is on the way is given some additional impetus by the chancellor's measures. francine: what is the test of

success going forward for the treasury? how will they measure success? they cannot prop up companies that would have gone bust but i guess they need to prop up the healthy ones. i think they have got to take a longer term view. actually, i think it is that third stage of sustainability. what you want is, those companies that have really good, strong business models, that have competitive advantages, that actually are going to have the ability to grow and also abroad, you want those strengths reinforced. where those business models are good and there is a shortage of capital, that these businesses get access to capital. so i do think that you have got to start thinking beyond the

andnt of the short run pain thinking about that third stage of how sustainable the recover is going to be. because actually, the real acid test of whether these measures are successful will come in 2022 2023 to see whether economic momentum will be sustained. the political element will be important as you move into the second stage of -- they cannot fix everything. francine: how do you see the recovery actually playing out? is it going to be patchy? it is difficult for anyone to know. if you need to look at markets and what kind of economic recovery we will see, how do you model that out? keith: i think it is really difficult and it is deeply uncertain that in the short run, we are in uncharted waters.

i think what we are going to see is probably a w-shaped recovery that.obably a wobbly w at you have a national downdraft in output, which is a result of all those measures to protect our health. as you return to work, hours lift, you get a strong bounce and economic activity. i think there is strong evidence that markets have done well because capital and liquidity d that hasnjecte found its way into markets. those that can raise additional capital have done so and enhanced their chances of survival. think, isroblem, i that those that can raise money have. that is not necessarily those that need it to raise money -- needed to raise money. i think we will see more corporate distress in the second

half of the year into early 2021. i think we will see the rise in structural unemployment. i would not be surprised, even without a second wave of coronavirus, which is impossible inknow whether you see a dip economic activity before you see a more sustained pickup on the other side. the chancellor is trying to put in stimulus measures that will minimize the extent of that second. francine: when you look at a lot of politicians, they are saying that this is also an opportunity to change an economy. we are also facing brexit. how will this u.k. economy change? to move more towards renewables, towards technologies?

so i think there is a chance to do two things here over the longer-term. one is, make sure that the measures that are put in place do have a green element that we in notelerate investment just insulation and houses but thinking about how we make the transition to a lower carbon economy. we will see the benefits of that come through. that, i suspect, is something we will see a bunch of because it will be more about fiscal incentives. the under -- of the other major challenge about -- and the other challenge -- the other challenge of changing the u.k. economy, we want to see consumption coming back quite strongly.

over the longer-term, you really need a switch away from consumption towards investment. actually, one of the things the is. can do post-brexit thinking about changing those deep incentives that define the way in which you invest. so as we think about the way in which insurance companies or pension funds allocate ou assets, we get a chance to think about how that could be for the benefit of the u.k. economy rather than applying to a set of u.k. rules. that will be a key driver of funding competitive advantage. we will need a very competitive u.k. economy if we are to e europeantside th

know,nd compete with, you one of the most competitive countries in the world, the united states. francine: thank you so much. keith skeoch there from standard life aberdeen. we will bring you live coverage of the chancellor's speech. later today, we will speak to stephen barclay on the u.k. financial statement at 4:30 p.m. london time. we will discuss the future of the investment management industry with keith skeoch from standard life aberdeen. this is bloomberg. ♪

francine: economics, finance, politics, this is "bloomberg surveillance."

let's get straight to the bloomberg business flash. >> -- is launching a review -- boohoo is launching a review of its suppliers amid concerns about labor exploitation. shares in boohoo have lost a third of their value this week. the clothing company could face an investigation under britain's modern slavery act. to 2200s to lay off up u.k. staff at jaguar-land rover factories. plant40% of staff at the face dismissalss. the company is owned by deutsche post, which just announced a guidance for the year. slumping on reports the u.s. may punish banks in hong kong and de-stabilize the currency peg to the dollar.

hsbc may even be a specific target. the british lender makes more than 2/3 of the pretax income from hong kong. hsbc recently back to china's new security law, drawing criticism from politicians in the u.s. and u.k. francine: global stocks on the back foot today after concerns linger of the economic impact of the coronavirus. let's focus on the markets and the future of the investment industry with keith skeoch from standard life aberdeen. when you look at the asset management and the push for yields, how do you expect a crisis like the one we have seen and are still experiencing change the asset management business? keith: i think it is going to bring significant changes to the asset management industry. i think on two fronts. andimpact of this recession

something that always follows recessions is a rising the savings rate. we have seen that. one of the things the asset management industry is going to have to do is help turn those savings into investments that help finance recovery. i think in order to do that, there are two things that are really important. we are going to have to recognize that over the next 5-10 years, an industry that has been focused on the institutional marketplace is going to have to think a lot more carefully about the retail and wealth investor and making sure we deliver good returns in an appropriate way for them. for me, after 10 or 15 years beta has beenand dominant, i think there is such a shakeup in the return

environment that actually the proactive, is really active asset management. but not just active asset management in terms of thinking markets -- i think we are going to get back to to realtals, opportunities in stock selection. i reckon that 80% of return will be associated with the idiosyncratic risks, specific company risks. so getting back to stock selection and active management i think is going to be part and parcel of that. francine: do you think also it will lead to more consolidation in the industry? you decided to step down from standard life aberdeen. is this because you felt like it was mission accomplished after the first merger years? that ii always said

would do five years as the ceo of the plc, which are actually up in august. i also said it would take three see the benefits of the merger coming through. i think at the moment, you can see our investment performance has remainder resilient during the crisis. that is being reflected in flows. we saw net inflows for the first four months of the year. one of the things the covid theis has done is, because human spirit is what shines in a

crisis, has brought people together. -- with those three things in place, there is still work to be done. there is still work to be done for my successor but i feel confident that i can hand over the reins and the successor can build on a strong set of foundations. francine: coming up a little bit later, we also speak with stephen barclay, the chief secretary to the treasury on the u.k. financial statement. that as at 4:30 p.m. london time. we will discuss the rise of gold. this is bloomberg. ♪

♪ francine: this is "bloomberg ."rveillance let's get back to the markets now and focus on gold's bumper year. ant prices is nearing $1800 ounce. joining us now with the details is dani burger. dani: yes, today is certainly seeing golden nearing $1800 an ounce. 2020 has been the year of the precious metal and havens in general, as coronavirus takes its impact on the global economy. for every single month of this year, the commuter live inflows inflows tocumulative

gold backed itf's has -- the prior record for inflows into gold etf's happened in 2009. that is this a blue bar over here. we just surpassed that at 655 and we just passed the halfway mark of the year. certainly a chance that these could turn into outflows in the second half, meaning that we would not be at that record anymore. traders think otherwise. they are continuing to bid up gold. according to hsbc, a metal strategist at their says the continued support from central banks, low interest rates, expanding balance sheets and fiscal support not only means old's gains will continue to the rest of the. francine: coming up, get britain back to work. as chancellor rishi sunak gets ready to deliver his plans for

the u.k. economy, we speak to the chairman of the biggest family-run equipment business in the world. are interview with james reed is coming up shortly. this is bloomberg. ♪

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

with leigh-ann gerrans. leigh-ann: president donald trump says the u.s. is considering banning video app tictoc, one way the white house is looking to retaliate against china. over its handling of the coronavirus. no specific details on the potential ban as of yet, but according to a children's privacy advocate, the asset also faces a probe into the u.s. over its data collection practices. prime minister boris johnson is again warning the u.k. is ready to leave the e.u. without a trade deal. he made the comments in a court with derman chancellor merkel -- with german chancellor merkel. able toain will not be loosen regulation and still enjoy single market access. the federal reserve is signaling it has gone for more policy action if the economy stalls. richard clarida says the central bank can turn to more forward guidance and asset purchases.

raphael bosticef cautions the spread of covid-19 may threaten the pace of the recovery. president donald trump's estranged niece is releasing a tell-all memoir next week. bloomberg news has obtained a copy. mary trump says she watched as the president endangered -- a spokesman full of falsehoods and that the president sued to block its publication. global news 24 hours a day, on air and at bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries, i'm leigh-ann gerrans. this is bloomberg. francine? francine: what should the chancellor do to get the u.k. labor market back to its feet? my next guest is the chairman of the biggest family-run recruitment business in the world and is also the founder of keep britain working. joining us now, james read,

recruiting.reed with job losses, job changes in how the economy bill be left scarred forever, what are the two or three things that should be a priority for the government today? james: hello, francine, good morning. it is a unique opportunity. with so much focus on jobs come to makes some big improvements to the way the labor market works in the u.k., and to encourage and enable more people to get back to work because this is a very serious situation for a lot of people. with so many people being furloughed and so many people being supported as they are self-employed. or than half the workforce is either unemployed or underemployed at the moment. so this is a huge moment, and i hope it is an opportunity that will be seen. the thing i would like to see is a focus on apprenticeships. the apprenticeship levy was introduced four years ago and

has not worked. fewer peoplen taking apprenticeships. i would like to see many more young people coming into the labor market. if the also like to see review of the national insurance. that is a tax on jobs and has been a tax that has been steadily increasing over the last 20 years. i would like to see that reviewed. i think it is important that we do what we can to encourage jobs . the current national insurance and of 13.8% is high penalizes companies that employ lots of people, and obviously we want companies to employ more people in these circumstances. the third thing i would do is look at how the labor market works better. can we have smarter employment law? there has been a lot of law introduced over the past two decades, much of it from the european union. all of it with good intentions but some of it does not work very well, and i think it to be

improved. francine: when you talk about apprenticeships, why was the previous scheme not working? was it not enough? was it schemes for the employers, or the government did not do enough to make sure these kind of apprenticeships and training were put in place for enough people? problem really was that it was too complicated. there were too many rules around how to do it. we have apprentices in our business and we have engaged with the schemes, but to levy a tax that large employers have to pay, which is meant to go into apprenticeships, but much of that money is not being used because employees are able to access it. it is important that that money is used and -- employees are not able to access it. it is important that the money is used and accessed. i think the -- i have seen the

announcement that there is going to be a track approach to get young people back into work and to support them. i don't know whether that will come out in the announcement -- i hope so -- that would be a start. it is too complicated to administer. francine: how changed will this economy be? i know you basically say we only have 100 days left to save the economy. if coronavirus, if there is a second way, if we go back into lockdown, if the economy gets much worse from here and we don't do some of the things that you have laid out, what kind of economy or jobs situation will we be left with? is a very challenging situation in the labor market at the moment. 68% theseen jobs slump beginning of lockdown, now down about 50%. the market is recovering, but a

second wave would be very harmful. so i think there is a real danger that unemployment could reach very high levels of 4 million or 5 million, which would take it back to the 1980's, or worse, the 1930's. i think it is a long way back your room here -- back from here and i don't think it is a v-shaped recovery. i think it will take two or three years to get the market back to where it was at the beginning of this year, and that is with a fair wind. that is something we would have to be prepared for. francine: when people in your industry -- with people in your industry, what are they looking for at the moment? are they saying i don't know whether i want to recruit or employee because i don't know what the economy will look like, or about a second wave, or are they looking at particular skills because the economy is changing because people are working from home and people are doing things via conferencing and apps and the web and things

like that? james: for the first time in the last couple of weeks, you are looking at new jobs returning to the levels of early march. many more people in the labor market are looking to move or to move on, and that is positive because people are coming out of lockdown in the labor market and looking for new jobs. sectors --ng certain obviously during the health emergency, they were really busy, but now we are seeing other sectors such as financial services, accounting, and marketing and pr growing again. that is encouraging because it suggests that the wider economy and a certain sector is picking up again and people are hiring again. needst means -- it just all the encouragement we can give it really. the announcements today will be part of that process, and i hope they will be followed by some

structural improvement in the labor market, because this is a once in a generation moment to do that because so many of our eyes are focused on jobs. francine: do you think more companies are looking to expand their recruitment efforts to be more inclusive and diverse? james: definitely. many businesses are looking at, but a danger at this point is particularly when so many people are being furloughed, attention is not paid to ensure that the companies bring people back from furlough in a good fashion. so looking at a furloughed workforce, making sure that businesses bring people back fairly and equally, businesses are looking to improve their performance on inclusion and belonging, as i call it. there is a way to go, and i would hope that this effort would really continue. francine: thank you so much for listening to us today.

james reed. we will bring you live coverage of the chancellor's speech, from 12:30 p.m. london time. later today, we will speak with the chief secretary to the treasury, coming at 4:30 p.m. london time, and this is bloomberg. ♪

francine: this is "bloomberg surveillance. i'm francine lacqua in london. the carmakers general meeting, we will keep an eye on that. june global cart deliveries are slightly above the prior year,

and he is determined to deliver on the economic goal. it is interesting to see where he sees demand recovering from other parts of the world. let's get to the bloomberg business flash with leigh-ann gerrans. leigh-ann: deutsche bank is paying new york's banking regular 100 $50 million that $150 million -- $150 million. the regulator says the bank failed to detect suspicious transactions regarding jeffrey epstein. deutsche bank says it deeply regrets its association with epstein and is cooperating with authorities. barclays has reached out to potential candidates to gauge their interest in the top job as part of long-term succession planning to replace chief executive jes staley. sources tell bloomberg know from a move is underway but that staley could leave the lender as soon as next year. there is increasing activist pressure to replace him as ceo. boeing has settled 90% of the

wrongful death claims over the 2018 crash of it 737 max jet operated by lion air. the company did not say how much it paid the families or estates of the passengers and crew killed in the crash, but boeing said it is optimistic remaining cases will be resolved. that is your bloomberg business flash. francine? much,ne: thank you so leigh-ann. the white house has made good on his threats to the world health organization. the trump administration has sent a letter to the agency giving it a one year notice it plans to quit. president trump says the international body has been too itsrential and too china in handling of the pandemic. near 3ronavirus's case million. despite the fact that it has killed tens of thousands of brazilians and left him with the disease as well. also narrow has called the virus a little flu and he bought ontors and hospitals

quarantine measures. great to speak to you on a day like today. when you look at what is happening in brazil and latin america and what happened to the brazilian president yesterday, saying he had covid-19, is there theway that it brings home virust effect that this is having on the continent? is there any way to slow the spread quickly in latin america right now? recommendedbho has that's what the w.h.o. and most health officials -- what the w.h.o. and most health officials recommend is the tracking of those who have been exposed or the isolation of those who are found to actually be sick. that is a rather large undertaking. even here in the u.k., broad-based, it is extremely

difficult to carry out these of yous, in part because need equipment, you need it is just -- the disease is widespread. you have lots of people to track and trace. there is concern in the united states, which has the biggest outbreak of covid-19 in the world, that some areas, there is so much virus that it is impossible, it may be impossible now to actually do tracking and tracing and find everybody who has it. that is a real concern. himselfourse bolsonaro is insisting it is just a little flu, trying to downplay the effects of it. so i think the concern is, will people take measures like social distancing, just sort of let the

of trying toures protect yourself from the virus -- are they going to take that seriously? francine: given that we have had the disease for about five months in the world, three months in europe, the same amount in the u.s., what have we learned? is there anything latin america can do apart from socially distancing and wearing masks, or a lockdown, that can help? john: i think testing, tracking, tracing, if they are able to do that, that would make a big difference. again, it takes commitment of resources. if they can do that, if they can get accurate tests, get them out to communities and find people who are sick and isolate them and find people who are exposed and quarantined them, yeah, there is a lot that can be done. francine: what do you make of we get theat today

letter from the u.s. to the w.h.o. saying they are going to withdraw? can they reverse that? john: i don't know the political ins and outs of it. i have to assume that if you leave the w.h.o. you can rejoin the w.h.o. i don't think it is a one-way street. this move comes at an unbelievable time, when the u.s. is just as vulnerable as other countries. you could argue more vulnerable right now. the w.h.o. is planning to send a mission to china to search for the origins of the virus. as you know, this has been a big source of contention between the u.s. and china, whether the virus originated in a lab, where it actually came from, is it a bioweapon, that sort of thing. now that the u.s. is withdrawing from the w.h.o., you really have , anynder whether anybody

americans, cdc or not, at the w.h.o., whether they will be involved in that effort, and of course the top experts in this area and other u.s. organizations. francine: the virus is so difficult to spread because of asymptomatic cases. asymptomaticw many cases that there are, and are they really asymptomatic? john: there are a variety of estimates, anywhere from a third to hey have -- to a half of cases. there is a distinction made between asymptomatic and pre-symptomatic. that is pre-symptomatic people who go on to develop the disease later. a symptomatically -- a asymptomaticlly --

never experience symptoms. you may be habit and you may be spreading it. that is why there is such -- you may have it and you may be spreading it. why people are encouraged to wear a mask, because we know it is spread by droplets that come out of people's mouths and noses. so if you wear a mask, you should be wearing it over your nose and your mouth. the idea is that if you are wearing a mask properly, it should at least decrease the risk that you will spread it to people around you, whether you are experiencing symptoms or not. francine: thank you so much for the update, john lauerman, our health editor. coming up, the path to the e.u. recovery, angela merkel heads to brussels today. we are live in brussels next. this is bloomberg. ♪

francine: economics, finance, politics. this is "bloomberg surveillance." let's take a look at some of the events happening today. in a later speech, rishi sunak will outline the government set up a plan to kickstart the economy. is expected to show a partial recovery from the -- from march and april. later today, president trump hosts his mexican counterpart at the white house, and it will be the mexican president's first foreign visit since taking office. chancellor angela merkel heads to brussels, her first trip outside germany since the coronavirus crisis started. she will use the opportunity to back the 750 billion euro recovery fund ahead of a crucial meeting with e.u. leaders next week. let's go to maria tadeo outside the european parliament in

brussels. angela merkel wants a quick deal. can she get it? the bigrancine, that is question, the reason why she is here today, speaking before the european parliament to pitch the , 750 billionhis euros of which will be handed out. she will repeat the same arguments she has been repeating for weeks, the fact that this recovery fund will help to kickstart the economic growth in the european union but also protect the single market. you can look at this as a gesture from angela merkel. ultimately this is a country that -- that is what angela merkel has been stressing at this point. whether we get a deal next week in the european summit will depend in many ways on the frugal four, in particular the dutch prime minister, who is playing hardball and it is

paying off in polls. he is doing well at this point. if you look at the european commission, they argue a quick deal will be good for the european economy. there could be serious divergence in the economy, a two-tier recovery, if we don't get a quick one done. but it is not guaranteed that we will get a deal next week. francine: we need this recovery plan, otherwise we are going to have maybe even a more uneven recovery to what the commission was talking about yesterday. reena: yes, and if you look at the -- korea co. yes, and if you look at the numbers, is going to be -- maria: yes, and if you look at the numbers, it is going to be -- what is really striking is when you look at the different countries, you see 6% contraction in germany. when you look at the european periphery, italy is headed to 10%. so there is a serious difference between the core and the south. for a country like italy, if the

recovery fund does not get done, does not get approved quickly, you could see tensions in the market emerge. we have seen btp's stable at this point, but that could change if the funds and needs change. francine: maria, thank you so much. maria tadeo on the ground in brussels. this is what the markets are looking at. partly they are looking at the recovery fund, looking forward to the speech from angela merkel. the focus is also on oil. we look at oil almost day in, day out, but if you look at oil, it has moved a little bit on the back of some stockpiles in the u.s.. treasuries on the dollar steady, gold trading near its highest level since 2011. ♪

francine: sunak's spending plan. the u.k. chancellor is set to unveil his measures to reinvigorate the economy, but will it be enough to drag britain out of its deepest slump in centuries? the u.s. bids the w.h.o. goodbye. the government sends a letter that starts the one-year notice period to depart the health organization. cases in the u.s. approach 3 million. and america may target the hong kong dollar. some of president trump's top advisors want to undermine the currency's dollar peg to punish china for its recent moves. well, good morning, everyone, this is "bloomberg surveillance." i'm francine lacqua and london. tom keene in new york. we will spend a good amount of time at looking out what is going on with the u.k., with some extra help or not from the chancellor. we will also look at what is happening between hong kong and the u.s. we look at latin america, more specifically with brazil, with bolsonaro, the president, contracting the coronavirus.