at evethn ough his mother is not there, she loved him more than anything. [theme music] >> an industrial boost for european equities shows first data in china. stocks pushing indices into the green. >> drug suppliers and president trump ready with an executive order. facing a backlash from the french government over access to the coronavirus vaccine. the right call

could bt sell its stake and they refuse to comment on the rumors. we've got data crossing from germany. all eyes on the growth rate. first quarter gdt number has crossed ni crossed minus 2.2% the recession should have reached the low point in april given us some market on the back of this data but that contraction will accelerate in the second quarter but we are just seeing it number cross. in terms of what we are seeing elsewhere that is minus 1.9% forecast on the contraction of

1.6% according to the stat's office bringing in annette on the back on these numbers we know various sectors have been hard hit. autos with a huge slump. what do you make of these numbers of 2.2% quarter on quarter. >> it was quite what we expected from the german economy contracted by 2.2% quarter by quarter. i was listening into press conference the head of the office saying it is the quarter we are talking about is the quarter where it was like two months not affected by the pan deemia. the lockdown in germany started in midmarch. other industries were affected like the auto industry because we are seeing that facility shut down because of the global supply chain

overall, the months of april is really the lockdown months for all the indices in germany this will be the months which will be felt the most going forward. what they will explain to us how the month of april is looking like and how severe that down turn will be for now, it looks like this crisis, the coronavirus cry sustain and the effects on the economy will be worse. we cannot judge how the recovery will be. one thing is clear that the shutdown is unprecedented for the german economy since the second world war and we don't know how much the pick up for the demand will be overall, it is a bleak picture for germany. the labor market is quite stable because of all of this we have

in place, the fiscal side responded swiftly and bold we are now awaiting another economic stimulus package in the making from the finance minister despite the fact that of course the tax revenues are just in free fall. we just got a number yesterday that we are having an 80 billion tax short fall but the german fiscal side is performing what they should do the ministry of finance is preparing a broad fiscal stimulus package so that it is not only the emergency measures we have in place but after the pan deemia is over that the economy can again gain traction. bottom line, the numbers quarter on quarter and the worst is yet to come for april. back to you. >> thank you let's bring in the chief

economist in the eurozone and head of macro at iag the contraction in the first quarter clearly only cover the lockdown window. what do you feel so far is the damage for germany >> not as strong and severe as other european countriesbecaus the construction sector was still strong in the first quarter. this was only two weeks of lockdown now that we are going into the second quarter, this number gives us the idea that second quarter will be much worse and we'll be back at the numbers which will be worse than we saw in the 2008, 2009 cry sustain. >> can you give us a link. germany was held up in one place that was higher steam because of

the testing and the managing of this slow move out of lockdown is there going to be a link for germany versus other countries that have handled this crisis as well >> there is a link if you look at the mobility data, you will see that lockdown measures with less slow down activity for example in spain and italy. now that we are already in a period don't forget, the german government started to lift these measures in april. because of the gradual rebound and judging from the mobility data, germany is back at 80% of economic activity and leading the rest of europe it looks as though germany will not only get out of this crisis faster initially but also stronger >> i want to ask you about the

labor market in germany. the short-term working scheme the government has employed has provided robust support and limited the number of job losses so far it can only provide support for so long. what does the future look like as the support scheme begins to roll off and the economy gets back up and running but on a limited capacity basis >> it all depends on additional or other stimulus basis. we have 35% of gdp being put on the table by the german government to support these economy. we have now some 10 million people filing. there are services out there, already 25 to 50% of these people afraid they could use their jobs

the longer this crisis lasts, the long it could take significant rebound. the higher the chance these short-term work schemes will eventually get unemployed. >> on top of all that german economy is dealing with on the pandemic front, president trump in the last 24 hours ramping up pressure on beijing. certainly no signs of tensions bathing and the german economy very sensitive how well prepared do you think german industry is to deal with further tensions with the u.s. and china from the supply chain and demand perspective >> look at the last two years. down turn already prior to the covid-19 also, that's a very important cause from 2008, 2009.

germany came nicely out of the crisis because of the export-led recovery there was asia and china having tremendous demand for products be it that asia is much more mature than 12 years ago on the economic side and fundamentals there won't be this nice strong led recovery on this additional point. only one thing which is key to the stimulus we can get in the second phase of the recovery package. more taylor made also doing more investment, utilization, the better the prospects are. is it enhanced or off the structural shift that they had to go through anyway >> i'm curious about the move and spending clearly, there has been more

struggle with that how concerned are you from this constitutional court challenge do you think the lack of clarity will hold back some investment in europe. because they are concerned the policy may not be as robust in the eurozone >> it clearly undermines the ecb as the lender of last resort it is a doubt of the strength and validity i tli are so many ways to go around it. there is an ongoing debate and whether the ecb will react or whether they say we only report to the european court. i would not be surprised when they meet again if they step up the current ppe program. just to show that, yes, they are still there. to be the lender of the last

resort in the eurozone >> thank you for joining us. the chief economist of eurozone and macro at ing moving on to china where we saw industrial output rebound in april as the country eased lockdown restrictions and factories reopened but retail sales remained under pressure, falling 7.5% for the month. looking at market reaction that investors may be disappointed in a small improvement of economic activity when china is the first out. i'm surprised that the markets are surprised. i remember saying, when china reopens, who are they going to be selling to? >> right and today's market reaction had to do partially with the fresh, you know, renewed u.s. and china

trade tensions or just tensions, rather than trade tensions i think that's another layer of uncertainty that market is digesting at this point. of course, a lot of focus on the mpc meeting happening next friday and a lot of stimulus expectations are out there we didn't really get that. the latest decision this morning talking about the medium term lending. they did inject money but didn't cut the rate there so the lack of aggressiveness coming from the bank of china. something the market reacted to. when it comes to the demand side of thing, there was the disappointment retail sales down 7.5% missing expectation and still struggling because of the virus impact. this is a difficult story going forward. even if there was a strong

recovery and beat when it comes to industrial production side. a lot of people were talking about how the soft demand could come back to the picture and damage the production side of the story as well. that's exactly what they were talking about in the reaction to this latest data dump out of china as well. i think it really goes both for external and internal demand as well sure, china was the first in, first out. what happens to the rest of the world is still for the rest of the world as well. what is important and interesting. we had a conversation with morgan stanley, chief economist and how he was highlighting the importance of breaking down the demand, which sectors are benefitting from this stay-at-home economy, this new normal in 2020

he was talking about how there is a demand for smartphones because now consumers in china are viewing smartphones as an extension of their homes, their existences and inhabitants that was an interesting point. when he singled out sectors like leisure and travel that's not really an encouraging sector in terms of seeing that recovery as well there is a bit of pressure when it comes to the currency you you are looking at the board there. that's exactly what the market is bracing themselves for, that stimulus coming out of pboc and chinese authorities in days and months to come back to you. thank you. coming up on the show, the tensions over the drugs and why the french pharma giant was forced to backtrack, after the break.

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here is how markets are shaping up

we have green on the board markets have been reversing. falls 4.2% stocks are up 600 before this session. we are trading with some red ink the dax 1.4% as we see the crossing on the contraction in the first quarter. the french market .9% higher in terms of sectors, this is how it plays out at the start, we saw a bounce in markets that were hard hit basic resources and oil and gas. we see the expansion and industrial output. every sector trading pause there. only just now for real estate.

health care now 0.2% higher. secretary of state has praised a multibillion investment of chip conductor. the company, which is a major apple supplier will invest to build a factory in arizona adding that it has a strong partnership with the u.s. government president trump has threatened to end u.s. ties with china adding, quote, we could cut off the whole relationship explaining he did not want to speak with president xi jinping right now. >> a terrible thing happened you can look at it as a source it took place at a certain point. we asked to go over and they said no. they didn't want our help.

i figure that was okay because they must know what they are doing. it was either stupidity or deliberate >> president trump sciencing an executive order that certain drugs must be made in the u.s. the mandate could come out later today. some 72% of the country's pharmaceutical suppliers are located outside of the united states, including in china this measure is part of the wide-ranging effort to protect the supply chain >> president trump's key advisor has pushed for a directive that would reduce the u.s. dependancy on overseas drugs. navarro stressed the need going forward. >> bringing the supply chain and

production home. deregulation to make that possible and innovation to stay ahead of the competition manufacturing, joe, is also national security now. if anybody doesn't believe that, look where we are with the pharmaceutical supply chain, stretched out all over the world while we could have been here. >> making the vaccine available. the classification comes one day after the french pharma group suggested that americans would likely be first in line. comments were met with fierce criticism from the french government a meeting is scheduled to take place next week. let's get to charlotte for more. i would say this is interesting. clearly short term, everybody is trying to have the right access and treatments we notice a lot of consolidation

in the industry. this is crucial about who gets what force and clearly those deals would face even more scrutiny >> that's right. we've seen regulators talking about how they won't study a lot of these deals at the moment an example of one and maybe more to come with countries competing with the pandemic. first things we saw in france to preserve some resources. then after sharing resources but that was only the second step. the first reflex we've seen with protective gears was to protect these stocks at the beginning. sanofi with the vaccine here another example of companies being caught in the exercises here with countries competing to get access from this crucial

equipment at the time of course trying to deal with this pandemic >> i think this is part of a bigger topic we don't know. i've gone on to the fda website. i recognize viewers at home spend a few minutes and look at the website. it is a wealth of information. what we've discussed is if we've come up with a new technique or drug or process, how long do you get first on this or in this case, we are talking about covid-19 before you have to open it up to everybody new chemical instances get five years of exclusive seven years clinical investigation exclusivity. those are the windows. now spin that back to covid-19 you think of the vast amount of money the public and private sector are putting into this the public sector wants their

money back as we've seen with this spat. the private sector will struggle, i would suggest, to monday ties this vast amount of money being put in one, this is a global pandemic you are talking about humanity here more than individual parts of society the other point, it is a gray area look at what some people are doing with the public sector oxford which is a public/private institution working with these companies. very, very difficult to monday ties these when you are talking about the broader sectors. >> you triggered a memory for me everything will change a lot of the companies have not been spending as much as the startup as we've seen in coming here's trying to bankroll these areas

you've seen a funding mechanism. i wonder if that switches back to the fresh interest because of the resources thrown at covid-19 and ultimately might change the profile of profitability, charlotte? >> i'll pick up there, if i can. i'm not sure if there is something wrong with the mic karen, i remember the famous merger glaxo and smith klein. it was a megadeal. they promised to spend billions in r&d and really take this company all combined together and take it to the next level. then they didn't come up with that if you look at their share price

today, they still haven't got back to that level they got back to at the end of december 1999 then comes to the unlocking of the genome and those exciting areas and the buy oiotec industa well a, they weren't making enough money. b, there were more anytime benie players around huge challenge for this industry it is a story we'll all talk about but we have to move on i'm standing outside waterloo station. mike and i have been around this morning and seen handfuls of people what is happening with the great return to work we'll discuss on "street signs."

welcome to "street signs." i'm karen tso, these are your

headlines. the sharpest contraction since the financial crisis a warning the following period will be worse. an industrial boost for european data showing the first rise lifting the stocks and all indices to the green drug suppliers rocked as president trump readies an executive order to protect u.s. production s s a backlash from french government and a plan to build a chip factory in arizona a move that will help the country's independence from china. a $1.6 billion pound funding to get people going and computers back after an enormous

spat between london mayor and the prime minister we've had a fresh read in on the damage for the german economy. showing us it is shrinking at the fastest pace since the financial crisis the german plunge 2.2 and 1.9% on the year. europe's largest economy was already struggling before the shutdown much of the economy in march caused much of those key areas with a huge plunge pointing out the market, we are stronger across the board in contrast to weaker trade for most of the trading week 4.2% plunge on the benchmark before we started out the trading day. just minimizing some of that red

ink. investor appetite weighing in with economies reee verging. in china wuhan, we have trade fights that have ramped up president trump's comments against xi jinping and demanding answers around covid-19. the answers at this point a little tentative in contrast to what we saw over the course of the week with the buy back as investors pick up some of these assets u.s. futures, all shaping up investors showing the $3 trillion investor package also trying to reverse. we saw the u.s. markets yesterday sinking effectively sinking the three-day losing streak we saw a little appetite there

after a rough week showing the shaky mood music on wall street. london has secured a 1.6 billion rescue deal after it warned it was hours away from running out of cash. still scarred from trying to use the underground network during lockdown very scant services, which meant many were packed in a small space. some with masks. some without >> just on the basis of what i see behind me, this is the biggest station in britain waterloo is the biggest station in many ways there is a couple of hundred people that have come out of there today. a million entrances and exits. you are right. it has been a political

football the mayor of london saying i can't put more trains on because it is not fair to my staff we want more bailout from the prime minister and the government to help offset the lockdown issue and in the blue corner, the government saying you have made a complete cock up of this. we need more trains to get more people out there safely. this spat way outdays covid-19 for sure they found a middle ground of 1.6 billion founds given they have promised 100% service as soon as possible. possibly 75% as soon as next

week we are increase tube and bus fares. previously, they wouldn't raise rates. but in kurn for this extra money, city con has agreed to a long-term review of the financing as well. mike and i have been in there today. the tumble weeds are going through. the magnificent men and women who work there but just a handful of commuters so the big return to work, a lot of office workers won't be coming back. it is really more blue collar and construction workers and the prime minister has told people don't come in by public transport, unless you have to, which compounds the problem. i wouldn't say either side has come out with glory on this one,

on this issue of the transportation of key workers into london. >> steve, thank you. in other news this morning, the ceo of italian utility expects activity to pick up but warned some lockdown measures will stay in place until the end of the year he said he was on the look outfor acquisition opportunities amid the lockdown. >> we go on until late autumn or until christmas, probably. it will be interesting to see which companies will survive and get there in good shape and which will barely get there. i think there will be companies selling assets and pipeline for products to stay alive

at this point, there will be opportunities. >> set to meet in a virtual meeting today. lagarde has called for a common sense adding that lawmakers must focus on enabling the economy. focused by 3.8% in the first quarter. the worst readings since beginning in 1985. financial leaders believe the pandemic will slow the pace of globalization and stag the eu market warning it may take as long as three years for economic conditions to return to normal the ceo of luxembourg for finance. the contraction there near 6 to

12%. >> the difference between 6 or 12% depend on the evolution of the sanitary or the health aspect of the crisis if the lockdown can be lifted as we are in the process of doing gradually as of now, the situation is going to be easier to resolve than if the lockdown has to be reimposed or continues for a time on the ground today, we have had like media everywhere else nine weeks of lockdown schools have restarted over the last few weeks and will allow people to go back to work as we are doing. some of the shops have reopened paunts and bars remain closed for the time as do fitness centers and swimming pools

little by little, people are going back to their homes and working lives. they have been active working from home. luxembourg has been a great financial center they have been able to work remotely 90% has been working from home and that has seemed to work quite well and that has helped us come through this for the time being relatively well i insist on the word relatively. >> having plenty of time to think about this in your survey, you have flagged the impact slowing the pace of globalization. we've all witnessed how difficult it has been to get key products at this point on top of that, president trump firing the rhetoric on china taking us back to the height of

the trade war commentary what are they doing if they think supply chains will fundamentally altered in the short term >> obviously what this survey and the answers show is that people are concerned by the reactions of governments that have raised the draw bridges by borders reemerging where they were not by supply lines becoming more difficult and so on. i think that really ultimately these reactions from governments may be understandable in the urgency of the crisis but going forward, obviously globalization has been a force for good. has been a positive force needed for the global economy if we want financial services to do what it does best, ie,

support the economy, growth, and job creation, we need to allow it to work cross border, which is what it fundamentally always does >> work cross border but also get a decent rate of return. my worry for that industry and the global fund management industry, they'll not be paid properly for taking risks weather it be alternatives or bonds. that industry is under grave threat from the low level of rates and dare i say negative rates, isn't it? >> of course, we have seen low interest rates and even negative interest rates over the couple of years that led to increased investments into asset classes that imply a certain level of risk not only private equity but really high-yielding income and

so on. the debt that governments are accumulating and central banks will of course continue this and prolong it and even exacerbate it this environment will not only continue but it will be made stronger i think it is too early to really tell what the environment will be that we will meet when we get out of this tunnel. there will also be opportunities for investments in other areas take the sustainable finance this to me will be one of the major positive opportunities coming out of this the transition that our economies and companies throughout the world will have to do in this area >> when we think about the near-term impact of all of this you talked about there

clearly the deflags is seen as the immediate impact it feels as though fund managers are increasingly talking about the longer term threat to increased inflation. the environment could provide opportunity for fund managers. among the fund managers that you surveyed to what extend is this showing up as a longer term debate as a result of all the stimulus that has been flooded into the european economies >> that is a question that certainly deserves to be dug into more detail we haven't asked about inflation as such but it is obvious. if you see how much debt government have piled on, anybody with an inkling on economy would know that inflation would be the normal reaction in order to try to

lower this debt in the long run. now other more qualified people than myself would discuss the very low interest rate environment. there are many different die mentions than this and obviously something everybody is looking at >> from a practical point of view, the pandemic has brought about certain industries both the sell side and the buy side, investors and analysts and bankers all working from home now. and luxembourg in particular a

hub. >> most quite like and most will keep some part of it given how well it has worked, you see how the ceo of twitter will see how his people will continue to do that indefinitely. many voices start coming out saying there are many positives in this remote work. first of all, traffic and so on and other aspects as well but there are also other sides you need to look you need to look at the creativity and interaction between people that comes about and how the exchange between people furthers business there needs to be a reflection that will take on many of the different sites. in luxembourg, we are a small country. many people commute from other countries. there will of course be legal

and tax implications if people work in their home country rather than in luxembourg and so lone all of this needs to be looked at that is one of the things that will stay from this crisis many people have discovered this as a pleasant experience i, myself, is one of those that would like to come back to this office i concentrate better i enjoy the interaction with other people and the exchange of ideas. i think that brings us forward >> i think many of us are on the page about the benefits of going to the office. let's push on to a story that we've been tracking bt is in talks to sell a multibillion-pound stake in openreach. the deal would reportedly value

openreach at 20 billion pounds bt has declined to comment the stock price shooting up as you can see in the trade today speaking to cnbc earlier this morning, the managing editor to emerging market said the deal turn around for certain sectors including the telco space. >> caller: it has seen already the first quarter in europe and the equity capital markets are higher the rates in companies like europe and from the beginning of april to the middle of may what we are seeing is capital markets are open because of liquidity being put in by central banks. clearly capital isn't the issue.

>> coming up, a rough time for retailers. looking at another dismal session for the u.s. data. (music) ♪

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nearly 3 million more americans filed for unemployment benefits a peak of almost 7 million in march. after the connecticut department of labor announced its claims number was overstated. in total, 36 million people have filed since the pandemic hit the world's largest economy. u.s. retail expected to fall last month plunged by 12.3% compared to previous record in march figures will be released before the markets open today many icony brands face bankruptcy amid pressure from the lockdown including jc

pennies, sears and brooks brothers others have already filed for bankruptcy the u.s. house is expected to vote on a new $3 trillion relief package today chuck schumer remains optimistic despite facing an uphill battle in the republican controlled senate republicans say it is dead in the water. is there any hope this will go through? >> well, it may go through the house today even though republicans are telling their colleagues not to vote for it. some have said they will some have said they won't. the real sticking point will be when it gets to the senate senate republicans think it is too expensive and packed with

things that have nothing to do with the virus the president has said it is dead on arrival. it includes money for the bill, state and local government, direct payments you mentioned and rental, mortgage and utility assistance for americans who have not been working for weeks or over a month now. there is money for more testing and tracing, which health experts have said is necessary to curb the disease here also today, president trump saying he will make an announcement about vaccine development. he's promised this vaccine by the end of the year. he says now the military will help distribute to make things happen faster. his former chief tested before congress that it will be a year, maybe even a year and a half at the earliest

thank you for setting the scene for us the dow is on track for the biggest decline since march. a number of major investors have raised questions over valuations in cnbc interviews over the course of the week >> caller: i would say 99 was more overvalued. >> caller: i think the market is overvalued and almost impossible to predict where consumer and corporate demands will come from and hard to create valuations for businesses >> caller: i think if you look at the overall market, we are trading at 17 times per estimate, which is about the average the past five years. those may be too high or too low but that gives you a sense of

what analysts are thinking if that's the overall market number, it might be a little extended given the fact that we have the bad news going over here i don't find it as overvalued as david or stanley do. >> nyse to partially reopen 26th of may saying the reopening will be slow and careful. they will have to wear face masks and have temperatures checked. the physical trading floor closed in march due to the coronavirus and all trading has been done electronically as we look to wrap up the week, green on the boards. yesterday, we snapped a three-day losing streak and drew up a lot of red ink over the valuations of the markets.

the dow down almost 30% for the week we'll see how much appetite that stimulus bill brings that tracie potts was talking about. the trade issues front and center president trump moving the rhetoric higher on the boards against china as they demand answers for covid-19 that's it for today, looking at futures moving back to positive territory after facing a rough week across trading sessions "worldwide exchange" is coming up next. stay tuned on cnbc

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it is 5:00 stocks looking to end on a high note after a rough week for equities some of the only stores are open what kind of numbers will home depot and lowes report the house prepares to vote on a $3 trillion spending package. abbott under fire. a warning on the highly touted testing kit not working as well as