i'm natalie morales, thank you for watching. [music playing] welcome to "street signs." i'm julianna tatelbaum these are your headlines germany plans to lift its travel warning for 31 countries by mid-june sparking a rally in travel stocks already lifted by lufthansa's bail outdeal the nikkei lifts and the pboc vows to continue to support the chinese economy.

the bank of france governor who is also an ecb board member says the central bank's emergency purchasing plan needs to be flexible to be effective suggesting further bond buying could be on the way. >> if we can't to guarantee the maximum efficiency, we shouldn't be bound some capital banks should be able to buy more and others to buy less the world health organization halts trials of hydroxychloroquine over safety certains as studies show it increases death and heart problems happy tuesday, everybody and welcome to "street signs." let's kick off with a top story involving the travel sector. the german government plans to

lift the travel warning by mid-june confirmed by cnbc sources. the new measures will allow tourists throughout the union, united kingdom and foreign non-eu countries taking a look at travel and looers stocks. massive rally. those shares up. tui up more than 30% bare in mind, you can markets were closed as the broader uk market rallied a little catch up there. broadly speaking, a very strong bid for the entire european travel sector. let's get to annette with more on this story. a pretty robust rally we are seeing across the travel sector. what more can you tell us about this german story? >> i don't hear the program.

>> annette, we will try to get out to you shortly this is certainly big news and driving gains across europe. interesting what this suggests about investor positioning we are seeing rallies of more than 15 possess. our investors are positioned for the reopening trade that seems to be coming together. ftse 100 up 1.75%. so outperforming the broader market part of that is the catch up trade. we saw stocks advance in terms of the rebound of business the dax trading about 70 basis points higher. cac 40 up 1.2% the ftse mib up about 1% in terms of the week ahead, investors will be looking forward to the european commission presenting the

pandemic recovery plan the task showing that weaker states such as italy can add without adding to their debt burden with the so-called breakthrough between germany and france in terms of the proposal they put forward in the face of the coronavirus. investors closely eyeing developments in hong kong. we did see markets come under pressure with beijing to move ahead with the security legislation. the fact that we didn't see a specific escalation in tensions between beijing and the united states providing for sentiment as well. in the week ahead, we've got cloud computing results to watch out for. hopefully we've got annette back with us. we've got our tech kinks worked out. run us through what your sources

will be telling you about this german travel story that has come together this morning >> essentially, germany is prepping to lift the travel ban for those 31 countries they have enacted a travel ban for the first time ever on march 17 that the authorities said with the foreign ministry. they plan on lifting it by june 15 because that is the moment when some federal states in germany, the summer holiday will start. the rational behind that is that it is essentially vital to kick start tourism and industry related to tourism especially to those countries most traveled to like italy, spain and greece this is the first bold move from

the government to open the borders once again we are talking about 31 countries. it is not only the eu, the uk, the scandinavian countries and also switzerland which will be allowed to travel again to and from their respective countries to other european countries. that is a bold move helping travel companies like tui tremendously we have seen shares surging on that news. when will it come? it might come as soon as today there is a draft legislation working with the foreign ministry right now it could be approved by cabinet by wednesday this week back to you. >> thank you for bringing us the latest stay with us i want to flush out this central

bank story ecb board member has told cnbc that europe's emergency purchase program must be flexible to be effective. saying it is the right tool to fight the virus crisis annette, you spoke to the ecb board member this morning along with geoff and karen really seems like he's keen to the flexibility of this purchase program. what are the implications that he's trying to convey to markets in terms of the flexibility of this particular tool >> actually, the flexibility of that tool is key what they want to achieve with that is to avoid fragmentation of the eurozone. which is something else if you spike in italy and spain because investors start to bet on the

debt stability then the ecb can directly intervene in these markets without taking care of the capital gain and normal asset purchase program it is the whatever it takes approach, once again flexibility with all respects when it comes to allocating the funds to specific countries or bond markets. also size matters. he was stressing that and also the size matters he didn't want to say no to a potential increase of the funds. he was also saying that most likely the funds, they need to be bigger in order to keep the credibility at a higher level. take a look at the potential of negative rates on the state and europe and the inflation target.

>> i don't have to competence the debate starting with the u.s. and they are introducing negative rates in our case, it works and has been working still more efficiently when we introduce the advanced effect for banks last september since we developed also the incentive of what we called tltro 3 with march and april and substantive support for banks. on our side, we are pleased with the way negative rates work. i don't see any reason to change the level at present >> governor, what is more important is understanding how much more support economies and financial systems will need from here either from the ecb or from

governments. could you share with us. what is your assessment of whether we've now hit the bottom in terms of the growth decline for the french economy and the eu more broadly as a result of covid-19 >> if i look at the economic situation, it was a very severe downturn in april as well as in the u.s. we are now under way in the economy which will be gradual and gather slow and which will be some what different in different countries. the main effect we have to deal with is the inflationary effect. we must stick to our monetary mandate to an objective of close but below 2% we are quite far from that at

0.3% at present. our inflation target is -- i stress it flexible and not straight away and midterm. we will have a debate in the strategic review of the ecb if we should go so far to have temporary average inflation over the period over the crisis we have to compensate on overshooting of inflation. this is our main aim the second is to prevent fragmentation in this recovery >> do you believe we have seen

the bottom in terms of unemployment rate? >> we have seen the bottom in the economic loss. if i look at the french economic minus 27% at the end of april and the recovery a gradual one is under way looking at unemployment, it has been quite table in europe if i compare with the u.s. situation. this means, unfortunately, that unemployment will increase less than in the u.s. but this will be one of the challenges we will have to deal with at least for some time. >> let me bring you back to the inflation and to the medium term i would really like to know whether you see a risk of inflation shugt up with all of

these extra ordinary measures and all the money pumped into the system >> this is a very important question we have many uncertainties about the economic situation, as i said we have probably less uncertainties with the short term without any doubt this shock pushed inflation down. i mention this very low figure of 0.3%. in the next future, probably the pick up in supply will be quicker than the supply in demand which should keep the inflation down there could be other affects in the opposite direction due to the increase of production costs. as a whole, most forecasters expect inflation to remain very

low and hence the policies to be for the future we will have to keep very low interest rates and liquidity to accommodate this too low inflation. >> we'll bring geoff into the conversation i thought your question to the bank of france governor around the potential to buy ecb companies was really telling he didn't rule it out but didn't take it take it totally off the table. what is your take of what he said there >> i think this was an incredibly important interview the remarks he has made should be understood by everybody let me spend a moment on this. i'll get to your question, julianna central banks other than the ecb

have a symetric inflation which means if it is more than 2%, they have to respond if it is less than 2%, they have to respond the narrow meaning that they only intervene aggressively when inflation is above 2%. that was the aim of the ecb initially to prevent the kind of hyper inflation that frightens germans and everybody else as the price control getting way beyond where it should be. what the bank of france governor is clearly saying here is that the central bank is intending to respond aggressively to the four-year drop this is the lowest inflation rate we've seen in four years in the eurozone at 0 dolt 3%.

this gives them the mandate to be very aggressive with the action they can go into the market and buy up bonds as a way of providing up liquidity the fact that he doesn't rule out equities the fact that they are main tools suggests there are keeping in mind other ways of keeping in the market, buying assets to push money into the economy. very interesting comments and it remains in the tool point as he said does not remain one of their key tools to remain higher inflation. >> annette, i think -- >> i think the next --

>> take it away, annette >> i think the next stock they might go into is junk bonds. given that we are most likely going to see more downgrades coming up with the economic situation with the eurozone and the financial situation of corporates deteriorating in the wake of the coronavirus crisis that ecb could go into corporate junk bonds going forward they have already a grandfathering rule. if italy wasdo downgraded to ju, they could buy it full on if it

qualified as a junk rating i guesses that why i was saying that might be the next thing we see from the ecb if they see we are going to see a severe tightening from the markets that would be the enlarge of the junk otherwise, they rely on the banking channel or just traditionally in the eurozone because financial intermediation in contrast to the states is going much more to the banks so it is very important that the banks stay safe and sound in order to get all these lows to the corporate world which is needed for now, this seems like it is also working not just for now but for the rest of the year and here comes probably the most dramatic part

because many commentators where it is clear to see would go sour that is a risky part of the policy whether it will continue to work through the exiting banking system >> you covered for us the deutsche bank ecm and saying now is an opportunity for the banking sector to be a pivotal solution to the stark contrast thank you for bringing us that interview. pushing on, asian markets closed slightly higher as they reiterated there is more stimulus in the pipeline telling the japanese parliament they were ready to do more for

the economy after the prime minister abe lifted the state of emergency ahead of schedule. >> china's governor has reiterated a pledge to raise policy and keep the rates low. saying they will remain flexible and said economic recovery is unchanged. as national people's congress continues this week. sfl coming up on the show, china's diplomat warns of a new cold war as tensions raise between u.s. and hong kong i love these fries. you know, the chef here trained in france. mmm, it shows! so good. oh hey, did you say you needed help with investing? because i know someone who's really great. and you trust him? totally. yeah. we went to school together. i'll check him out on investor.gov.

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hong kong chief executive has tried to calm concerns that china's proposed legislation will hamper people's rights and freedoms after a weekend of street programs of firing tear gas and arresting people before

assessing new laws >> the assurances are latent in the draft position as well as the explanation given by the national people's congress leader there is no need for us to worry because time and again in the last 23 years whenever people worried about hong kong's freedoms of speech, expressions and protest. time and again, hong kong has proven we up hohold and preserv those values we should see that legislation in front of us and understand why at this time, hong kong needs this piece of legislation for the bigger benefit of the majority of hong kong people >> taking a look at the markets, the hang seng has closed 1% higher this comes after they saw the

index plunge after 2015. a bit of a rebound in hong kong. let's get to emily, you warned us about the incoming protests over the weekend and the scope of relations break it down for us where do things stand now? is. >> well, protests are very much on the top of mind we have two pieces of legislation here that all of us in hong kong are keeping an eye out on the national security legislation being worked out by the people's congress. speaking to the deputy early this morning, he says the npc will approve draft legislation on the national security law and it will move to the standing committee to work on that legislation. because they only meet once every two months, it could be

the end of june or august before the national security law comes into place here in hong kong they still need to legislation the article 23 legislation with some other details aside from four points sustain egs, subversion and terrorism with the hong kong affairs with the current national security law which they will cover. talking about all of this as we have exhibitations of protests tomorrow the weekly council meetings which will contain the debate for the national anthem bill they have already warned they'll be taking to the streets as a result of this, police are deploying 3,000 officers and water cannon at the office this is to prevent crowds from gathering in anticipation of a large turnout. with water-filled barriers and

riot officers in the area. tomorrow, the officers will have the second reading of the national anthem bill this is the mark of volunteers if you misuse it or insult it, you face a fine and three years in prison. if history is anything to go by last year, june 12, it was the second reading of the extradition bill which has been withdrawn. thousands surrounded them not letting them get into the chambers maybe they are trying to rep kate the same thing. police have prepared because they learned from earlier lessons and the protests that were brought on on the weekend in response to the national security bill the npc is working on keeping an eye on the situation here these pictures coming through

yesterday. some peaceful protests in the mall where they are singing. this is the ifc mall in the central business district. you can see carrying various flags. mostly peaceful and abiding by social distancing rules. >> thank you for breaking it down for us. one sector on the back is luxury the luxury industry is expected to lose up to $640 billion in sales as the coronavirus pandemic keeps customers away. the lockdowns have pushed more people to try ordering on line, it has not been nearly enough to offset the loss of foot fall joining us now, thank you for being with us. before we get into what is happening in hong kong specifically, which is a huge market for luxury. i want to get your view on china overall.

in terms of your numbers here where the chinese expect 35% of luxury spent even though china is coming back on line, the rest of the world is much slower on coming out of lockdown what is your take on china in recent weeks >> caller: it is developing very strongly this was, in a way, expected because today was no chinese tourists spending elsewhere. the name of the game of the spend is returned in recapturing the spend. hong kong, as traditionally being a very important destination for chinese consumers to spend and buy

luxury product in 2019 already, hong kong had reduced significantly in importance on the back of the protests lows. those tourist lows hadn't picked up since then. those luxury goods are not new negative news. it is water under the bridge if you see what i mean. >> that is interesting so the market was already positioned for hong kong to play a smaller role, so the fact that we are seeing an escalation again shouldn't necessarily detour investors from getting involved one of the reasons chinese would buy more luxury goods outside of china would historically been because of the price differential do you think they will have to cut prizes in hong kong to

recapture that spend >> caller: from past experience, you look at the experience of channel introducing global prices and in europe and un prices in china that caused a major renegotiate. the chinese tend to see their luxury products as investments they don't necessarily like when brands cut prices because that means their portfolio is worth less i expect that would be a smaller gap. but that would largely be taken care of by higher presentation in europe itself in fact, what we are seeing is overall, the biggest and best brands in the world are increasing prices everywhere probably in an attempt to cushion with the higher unit margin the lower volumes we'll have

here >> taking this to the stocks specifically, what do you think of the valuations and which names will emerge as winners in the post-pandemic world? >> caller: because of the recession connected to covid-19, consumers will be spending less. this will be some what deteriorated as a consequence will probably become more conservative they will concentrate their spend on the top of the top brands i would expect further polarization with big brands like we talked with. like coming across on the side of winners and smaller brands competing to a struggle in the environment. a look at the first quarter update and see how the different brands will have performed and

would probably find a more difficult hurdle because in a reduced shopping list, they would probably not make it to the top you will have a very disproportioned impact on smaller and weaker brand that would be dropping from the list while the top of the top brands would continue to get traction not the bigger brands but smaller brands with strong social media interaction for example montclair will do well in this environment >> thank you for this. senior resent analyst, global luxury goods at bernstein. coming up, france is set to unveil game changing new stimulus for the car industry. more details after the break

welcome back to "street signs. i'm julianna tatelbaum these are your headlines germany plans to lift its travel countries by mid-june for 31 countries. sparking a spur in travel stock. the bank of japan plans to slash rates if needed. the people's bank of china also vows to continue to support the chinese economy. ecb board member tells cnbc the central bank's emergency asset purchase plan must be flexible to be effective increased bond buys are on the way. >> if we want to ensure the maximum efficiency of pep, some central banks should be able to buy more and others to buy less. the world health

organization halts trials of hydroxychloroquine over safety concerns as some suggest it causes heart and lung problems let's get a check on european markets as we are an hour and a half into the session. the ftse 100 up 1 d.7%. we saw stocks rebound. we are seeing gains across other markets. the dax up 60 basis points and the crack up 1.3 the leader this morning, the travel that basket of stocks up 2.6%. tui shares up. iag seeing strong rebound of

more than 15% on the back of that german story suggesting we could see the german airways reopen from mid-june let's take a look at u.s. futures for the start of trade on wall street opening up 500 points stronger and the nasdaq for a closer start eyeing developments in beijing. we were braced for a further escalation in tensions in beijing and washington that hasn't materialized. investors focused on global reopenings as progress has come together >> looking at measures from june 29, a week earlier than planned. the government is set to announce plans by european travel warning by mid-june according to media reports also

confirmed by cnbc sources. i mentioned travel stocks are seeing an increase tui shares 30% higher. iag nearly 20% easy jet also bouncing uk stocks getting more of a bid to make up for the closure the travel story front and center in and of itself. >> uk prime minister has backed its closest advisor over accusations he flouted lockdown rules by driving across the country. he said his top aid after driving 250 miles across the country to seek child care several conservative lawmakers have called on cummings to quit. he resisted calls to issue an apology for his actions. >> i don't regret what i did reasonable people may well

disagree about how i thought about what to do in the circumstances but i think what i did was actually reasonable in these circumstances. in terms of the rules, i think the rules made clear if you are dealing with small children, that can be exceptional circumstances. the situation i was in was exceptional. the way i dealt with it was the least risk to everybody concerned if my wife and i had both been unable to look after our four-year-old. >> the uk will reopen thousands of hyde street retailers restricting car show rooms and

all other nonessential shops can open june 15 all retailers will have to observe strict hygiene and social distancing. >> from june 15, we expect retail to reopen this will be contingent upon protest of the five tests and only permitted for those retail premises which are covid se tur. >> geoff with me now you can argue that this is a big story that deserves a lot of attention. what struck me is that this story emerged as the uk is now looking to come out of lockdown. this move by cummings could undermine the lockdown strategy and the public's trust in the strategy what is your take here

the uk is coming out of lockdown it feels as though investors are focused more on what happens here in terms of reopening and less on the political drama surrounding the coming story >> absolutely. i think the investment market is viewing the cummings story for what it is effectively, a member of the government has displayed a tone deafness to the way people feel about the instructions for communal lockdown. he is paying a price for that. we'll have to wait and see how long this lasts because there are new rules because there is a prominent issue because cummings will pay with his head we will watch and wait because there is understandable anger

over what he had done. let's bring up the pound here. the pound is as good as in way to understand. the pound is having a bit of renaissance this morning, particularly against the dollar. it has had an improving tone over the last five or six days here as i think finally the markets are beginning to understand that the uk is heading for a relieving of these lockdown measures. of course, we got the big announcement over the weekend that we have a june 1 day and ultimately a june 6 day for the opening of the retail sector the pound is reflecting people's enthus yac enth enthusiasum. a lot of that is down to one

perceived poor communication from the government on its strategy the high level of covid deaths and infections and of course that underlying issue of we are not making any progress on the negotiation at the moment and many think we may not get any before the end of the line >> an important note to end on especially because cummings was so strong on the angel perhaps that is what to focus on the implications that could have for brexit and looking beyond the pandemic austin martin is in focus after the company announced their ceo will step down saying now is the time for new leadership the carmaker has struggled since

2018 sticking with autos, renault and nissan have scrapped plans to fully merge the two carmakers according to reuters citing sources close to the matter. automakers around the world suffer from weak demand and production shutdown. both nissan and renault declined to comment on the report french president said support for automakers will be massively increased. saying it was part of the economy and had thousands of jobs he is expected to announce a stimulus for this sector today >> this is a very crucial week for the french auto sector

currently, those meeting for macron expected toannounce som of these measures this afternoon who has boosted this massively supported sector that has been hit by the crisis. new car sales in april down 90% there is about four months work of production just sitting there. they are trying to think about how to reboot de-poland fboot d cars you remember the volkswagen there it is a bit of a balancing act to get people to buy new cars while saving money. giving incentives to change old cars for newer cars, less

plutiplu poluting cars. stating the new plan for their plan nissan will announce their restructuring plan on thursday and renault on friday. renault is expected to receive a $5 billion loan guarantee. interesting political act they have to respond to while supporting the sector in the french economy to allow them to adjust the current tool and the new normal coming ahead of us. in balancing and supporting the sector with effective job cuts that are very much on the table as well. >> charolette, thank you for that we'll take a quick break

coming up, the u.s. announces travel restrictions for brazil as covid-19 cases spike for the southern american country. we'll be right back.

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welcome back u.s. biotech firm will buy $5 billion of its own shares from sanofi a strategic partnership will continue after the sale. both companies are working on the potential covid-19 treatment. in other news, novavax has started the human trials for the vaccine candidate. expecting preliminary results in july and determining whether the vaccine produces a response in humans >> the w.h.o. suspended trials

over hydroxychloroquine. suggesting the use of the drug actually increased the death in hospitals. president trump recently touted the use of the drug saying he was taking it to prevent infection ignoring advice of self-medication. interesting with the w.h.o. halting the use of hydroxychloroquine in its study. they are currently undertaking a massi massive trial studying four other medicines. the decision to pause the use of this medicine comes after friday's report after the study that concluded that they cannot only confirm the benefit but also that it could be causing harm to patients

there are smaller studies over the doubts of the ufs hydroxychloroquine in other studies used that caught people's attention in particular, there were 96,000 patients as part of this study while this is the anti-malaria drug approved to treat lupus and arthritis but they say no clinical trials have recommended its use for preventing or treating covid-19. that is the drug that president trump told the public he himself had been taking as a preventative measure let's look at u.s. futures where we are standing in terms of the wall street open. the dow jones looking higher and the nasdaq also set to open

higher the white house has announced new measures after brazil became the worst affected country in the world with over 340,000 cases. president trump continues to hail his administration's handling of the virus as the u.s. closes in on 100,000. the latest on the united states response to the pandemic with tracie potts >> good morning. president trump is saying we will concur what he is now calling the invisible enemy. he has upped the travel ban with brazil which was supposed to take effect thursday now taking effect tonight we are seeing cases soar in brazil they are now second behind the united states with over 360,000

cases and about 1,000 deaths a day as a result. they've overtaken russia so the u.s. putting a hold on brazil and the national security advisor saying they will consider banning other countries. as we continue to look at the numbers here, more states are lifting their restrictions we'll see more businesses open today despite concerns and even protests from some back to you. >> thank you for bringing us the latest, tracie potts, nbc from washington, d.c. that's it for today's show i'm julianna tatelbaum "worldwide exchange" is coming up next. stick with cnbc.

. welcome to "worldwide exchange." here are your top "five@5" as another american investor starts on trials. getting people out and shopping at retailers again a new warning from the w.h.o. to countries enjoying a decline of covid cases. unrest in hong kong. china dropping the hammer on free speech. the u.s. threatening retaliation. >> no luck f