oystein: the background for central banks is this, for norges bank, to act as the as amy has fallen sharpe result of the corona epidemic. amplified byit is very low oil prices. that was the background for clearly in to act, march. we have the policy rate at 1.5 which was reduced in march 2 1.25, and at this juncture we took another step to reduce the policy rate to zero. it is a policy reaction in our case where we had room to maneuver in monetary policy, in the interest rate policy, and we have -- utilized -- we have utilized that room to maneuver. you utilize the fx market? oystein: the answer is yes. march, where we were all hit by the virus and the downturn, we act did -- acted to reduce the policy rate and introduced liquidity measures. market with significant region krona and if you go for 20 years -- norwegian krone, and if you go for 20 years, we are ready to be in the currency market to continue to have the market functioning. we have done that to a limited extent, and you can find the numbers in the report we published today. tom: thank you so much for joining us today. lead the

the european central bank has spent billions in recent years buying bonds from member countries being was to prop up economic growth in the flagging euro area. but last week germany's constitutional court said some of the seabees actions were illegal under german law it ruled the bank should have thought more about the possible negative impact of its policy it's the 1st time the top german court has pitted itself against the use institutions in this way so does it mean a big clash at the heart of europe not according to the german government. as ever though the european court of justice is the guardian of the european treaties in our view the constitutional court has not questioned that it has merely called for a careful balance and justification of the policy. but the european central bank said it does not follow the rulings of national courts and commission president on the line is considering legal action against germany opposition politicians in berlin sense this battle could last for some time quotes because the in the short term we do not expect any fallout from the court's deci

the court adding the central bank incisions are not act up by the e.u.ruling does not apply to the asset purchase program. an internal u.s. government projection points to a surgeon virus cases, showing the out rake vastly accelerating by june 25ore than 200,000 cases and hundred deaths a day. the white house is calling it an internal cdc document. officials say it does not match with the coronavirus task force 's own analysis. people getting back to work might ease the pressure on economies across the continent, but it is far from business as usual. euro area economy is expected to shrink 5%. "dead,"l quotas are according to the regulator. it comes as the biggest u.s. crude producing state is set to vote on the measures. likely marking the end of the oil production caps during the historic caps that other states are still discussing the potential measures. dr. coronavirus. another threat from the disease. global news 24 hours a day, on air and at quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries, i'm v

their deposits protesters in the southern city of siddhant chanting revolution petrol bombs at a central bank building inside its exterior on fire before smashing the fronts of banks and beirut dozens marched across the city somewhere in medical mass while chanting against the financial system and shouting for more lebanese to join later crowds for old stones toward security forces positioned in front of the central bank so at least they're identifying the underlying cantillon effect the cause of a lot of our economic crisis around the world is that there is a select group of people who get free fresh 0 percent interest rate cash they're allowed capital flight all of their cash got to be taken out of the country and the soccer you know at the poker table this global neo liberal cantillon poker table they get trapped all their money is trapped inside the bank and they can't get it out but i. re re reemphasize that burning bank is a relatively ineffective the rave i mean you can rip up lots of money i do it all the time when i go to events i rip up money all the time i ripped up probably $50600

there is a big action from the central bank from the lending program, the lending of the banking sectorains to be seen what will volumesut by june, the that the banks will borrow from the central bank will be extremely important because there will be the refinancing of previous programs. it is quite a good measure actually. is other side of the program the pandemic and there was not much news on that side. program will have to be increased. and is extremely important, we didn't get much yesterday on this, as the reinvestment part of the program isn't clear because it is a short-term program. buying bonds in a very flexible way, but nothing is being said about what you do about the reinvestment later on. bank kept the case constraint -- francine: can i jump in? if we just take a step back, why do you think these paltrow's are more efficient than cutting the main refinancing rate? peter: you here basically if you -- the main refinancing rate the banks will accept liquidity. of the ecb [ indiscernible] slow markets directly and we will be able to refinance the book at -1%, which is favorab

the european central bank is taking note of this, but the independence of the central bank is above anythis. to turn thisant into a nasty fight between the ecb and the german court, so what is unclear at this point is whether they will do anything at all or delay the action. almost saying this is something you have to do with, it is not our response ability. secondly, you are seeing strong language between the german ecj, the european aurt, saying that this is not place for the court to intervene, and it sent a resident -- it set a precedent that we are starting to question on rulings. and you are allowing members of the european union saying i don't like this, i'm going to take it to court and perhaps not even follow. i will have guidance coming from the court, being institutionally above them. guy: the problem with all of this is that ultimately german politicians answer to the german people. you have only got to look at the front pages of the german newspapers at the moment to appreciate the growing concern about what is happening here. views areman courts to be ignored, ultimately t

central bank by the way in the name of citizens they argue don't have enough of a say so let's start there shall we but our correspondent reporting from berlin here is our tease peter all over. the coronavirus pandemic is putting pressures and strains on many relationships one of those that's feeling the pinch is not between brussels and when it comes to financial sharing in the euro so. called european central bank screwed up on would need to prove it was fit for purpose the single currency is launches to call to be used to the commission. like . the recent ruling of the german constitutional court to put under the spotlight is of the european union the euro system and the european legal system the final word in the e.u. law he's always spoken in luxembourg nowhere else with their well not quite a statement from a sort of on the line gave those that will be vying for the job of german chancellor next year when angle of merkel calls of the day i don't get unity to show just how tough they are mistaken from the u. commission in particular that part of the european law all of us takes

with central banks buying bonds. we have three really positive factors for bonds across the yield curve. we have seen some targeting of yield curves around the two year, three year mark stop the aussie started it with their target on the three year. people are suspected we may see more central banks moved to this kind of targeted quantitative easing simply because it gives them an exit strategy, reason to taper, irrational rational reason anyone can understand. hit your target and you stop by. that is a possibility. for the moment, things really look positive for the bond market in this rather terrible economy. -- i look at this new concept of yield curve control. what is it? >> the japanese were the ones who coined the phrase. they said, we are going to nail the short end, which is what central banks have been forever, setting overnight moderate or official policy rates that affect the money market. they can do that easily. using quantitative easing, the idea is then to buy or sell bonds at specific maturities, hit

i want to bring you other central bank action. this is a surprise move out of norway they are cut the policy rate to zero percent in a unanimous decision let me bring you some of the context as to what informed this decision the central bank says activity in the economy has fallen abruptly as a result of the coronavirus. the down turn has amplified on surrounding countries. the environment has weakened in the ex schang rate the economic activity is expected to pick up as containment measures are eased it would likely take time for output to return to the levels returning before the pandemic. the all-important question, how quickly would the banks be able to recover they do not envision making further policy rate cuts implying eamon tarry policy stance low rates cannot prevent the impact on the economy but it can help dampen the down tuturn they have cut rates to support the norwegian economy. >>> let's move to the bank of england who has voted to keep rate steady and held off on injecting rates. in line with analyst forecast. the

for this crisis has been the calls on the central banks are trying to sustain growth in those regions and practiced or still responsible and we saw the z.b. get into the market again quite aggressively back you remember and playing a critical role last year it is a very unusual situation so if there isn't a resumption of trade soon. extend that that sustains the world economy as we've seen a high importantly this then countries that have done quite well in terms of containing the fires are still going to be affected by the slowdown in trade and we're hearing who else resumption on all the possible resumption of trade his suit is between the u.s. and china which of course is going to be affecting markets for them somehow. there are some economists and indeed some political leaders been putting forward hopes that there might be a substantial economic recovery in the back end of this year and into 2021 is there any real prospect of a v. shaped recovery as it's called are we more likely in for a period of prolonged recession. we don't know that's interesting thing if you look at china and

the european central bank has spent billions in recent years buying bonds from member countries the ngos to prop up economic growth in the flagging euro area. but last week germany's constitutional court said some of the seabees actions were illegal under german law it ruled the bank should have thought more about the possible negative impact of its policy it's the 1st time the top german court has pitted itself against the use institutions in this way so does it mean a big clash at the heart of europe not according to the german government it's cute not. an example that the european court of justice is the guardian of the european treaties in our view the constitutional court has not questioned that it is merely called for a careful balance and justification of the policy. but the european central bank said it does not follow the rulings of national courts and commission president on the line is considering legal action against germany opposition politicians in berlin since this battle could last for some time. in the short term we do not expect any fallout from the court's decision but

called european central banks. would need to prove it was fit for purpose the single currency slot used to call them because to. commission boss didn't like. the recent ruling of the german constitutional court to put under the spotlight is of the european union the euro system and the european legal system the final word in e.u. law he's always spoken in luxembourg nowhere else with their well not quite a statement from a sort of on the line gave those that will be vying for the job of german chancellor next year when angle of merkel calls it a day and opportunity to show just how tough they are mistaken from the u. commission in particular that bar the european law all this takes precedence over national law especially in such a conditional form is simply not accurate chancellor merkel selfless and that kind of reasoning being a fiscal helping hand to corona should rely on existing other news like the european stability mechanism the despite the view it's a slap in the face by member states like. crippling auster

companies would build up a lot of inventory prices would get wake economy would slow down the central bank would lower interest rates to stimulate lending and the cycle would pick up again but starting with alan greenspan and becoming even more exaggerated with subsequent federal reserve bank chair people the business cycle has been overwritten by the greenspan put which became the bernanke he put which became a janet yellen put which became the jay powell put that is the say the central bank roll not allow the cycle to roll over they print and they keep printing to keep stock prices higher the bond market to give you kind of a signal in all this has been a bull market for 40 years right so what's your comment on that i think it's actually a popular human response i don't think it's a reality i think the evidence shows us from japan and the u.k. and europe that monetary printing is not necessarily an asset inflation issue it depends what the structural sense now pays in a i think that people believe in the u.s. that the central bank is omnipotent and i think that will be shown to be not tr

fors very important times central banks in emerging asia. ency meeting as well. -- fors that nobody can the bank of thailand, i think they might cut. the actions are outside of the central bank balance sheet. you have to realize that the bank of thailand, it has not allowed directives by private debt. for that, they are using is 400te bonds, there billion at the back of thailand's disposal to basically keep that credit in the sector mostmoke hit -- sectors hit by covid-19. at the end of the day, it would be all sectors. there is -- it is not the quantitative easing we just heard in the bank of new zealand. credit, whatabout --se emerging economists this is indonesia. seeing steepening of credit risks that are earning equity and the trade markets. stop that.o they need to start a wave of defaults. rates are important in as far as liquidity may be hoarded. even if you cut it and cut it, it still might be hoarded. you need to ensure a level in the credit market and the quiddity market. that liquidity, you have to put that the two used -- put tha

central-bank at this point. they are watching and waiting to see what is happening with the economy. we get reports on retail sales later this week. also, a lot of these companies doing price reports, and the retail sales report expect it to be about as bad as we have ever had in this country. we will find out what the fed thinks about that on wednesday. jay powell is giving a speech, and no doubt the world will be tuned into that. alix: no doubt indeed. bloomberg's michael mckee, thank you very much. i do want to touch on earnings that broke at the top of the hour. under armour adjusted loss a little wider than estimated, coming in at $0.34 a share. theysee negative impact -- say negative impact on results cannot be estimated. a very different story, obviously, for marriott. they had $4.34 billion liquidity , bute beginning of may total debt of $2.13 million, and cannot say the impact of the virus. nevertheless, they are seeing significant issues. they do say they have significant resources to manage, but those

known as the central banks you know the people who can create money. out of thin air in germany courts as i mentioned are pushing back against the central bank the european central bank by the way in the name of citizens who they argue don't have enough of a say so let's start there shall we but our correspondent reporting from berlin here is our tease peter all over. the coronavirus pandemic is putting pressures and strains on many relationships one of those that's feeling the pinch is not between brussels and when it comes to financial burden sharing in the eurozone germany's highest court said the european central bank's corona bond would need to prove it was fit for purpose if the single currency is largest economy was due to the commission boss didn't like. the recent ruling of the german constitutional court to put under the spotlight to ease use of the european union in the euro system and the european legal system the final word in the e.u. law is always spoken in luxembourg nowhere else so with their well not quite that statement from a sort o

germany's highest court house want the country's central bank may have to pull out of the key euro zone bond buying scheme the german constitutional court has upheld several complaints against the european central bank as project begun in 2015 to boost the euro zone's economy all says the e.c.b. must clarify that the asset buying program is not disproportion if it doesn't germany's bundesbank would be barred from participating in this deal. so what does that mean let's ask our financial correspondent conor boozman joins us from frankfurt comma will the european central bank now have to stop their huge amounts of months the acid. low get hot the asset purchases by the e.c.b. can continue at least for now that is of course the most important signal for the financial markets today and the reason why there has not been a shock reaction on the markets after the decision has come out what the german constitute constitutional court has said today though was that the bundesbank our reserve bank the national reserve bank here in germany which executes the e.c. peace asset purchases here in germa

central bank coverage in frankfurt.nie the ecb ticker on the bloomberg terminal. red headline here. christine lagarde says the economy is likely between the ecb's medium and severe scenarios. she says it is playing out nine the worst case scenario, but not on the best -- not on the worst case scenario, but not on the best case scenario, but middle-of-the-road. to answerntinues questions from the european youth on facebook. we will continue to track that for you. up next, the eu is set to unveil its recovery plan later today. the so-called frugal four are opposed to the franco german proposal. we will get the latest from brussels next. this is bloomberg. ♪ ♪ >> and making sure that possible -- as much as so that economic activity can continue unaffected by financing restrictions. we also have to make sure that is and wasy policy channeled and was transmitted whichhout the euro area, we indeed have a responsibility for. i would say the final thing that we did and then i will go to your questions and questions of those in

so you've got this big amount of central bank balance sheet expansion.pare it to the fed and what is going on with the ecb. if you look at what they are doing, the fed really blew this out of the park if there expansion of the balance sheet, but they have slowed down the rate of purchases. if you look at the weekly purchases, bank of england is actually doing a better job in terms of gdp. so, 1.2ing nearly 1% or percent per week of quantitative easing purchases in the gilt market. the fed at one point was doing nearly double that. it is now much bloomberg, around 40 basis points or so of gdp. so there's a big difference. the bank of england has really stepped up on qe. it didn't need to do much today, but overall, i expect a continued grind lower in the cable rate. alix: how does that translate if we look at rate differentials? yesterday we had the bear steepener. if we continue along that path and the boe is in the market every day, doing more than the fed, are we looking at a bear steepener in the u.s. and continued flattening in the u.k.? jordan: next

central banks like to keep their optionality. does the fed actually have any optionality in this sense, or are negative interest rates a sickly ruled out for america? michael: they are basically ruled out. they put it in terms a little andrew baileythan did. they say we are not considering it, but we wouldn't rule it out forever. but it would take an awful lot for them to go in that direction because it hurts the banks, and we know that from europe's experience. it takes profit ability away from the banks, but also hurts the financial markets. it disrupts the monetary transmission, especially in the united states because some any companies rely on the money markets, and the money market funds that will loan money for overnight transactions, that if you went to negative rates and money market funds were losing money on those transactions, they would stop doing them. so they are very aware of that. that is not a problem you have in europe because most financing there is not done in the capital markets, but among banks, which is one

in other central bank news, the e.c.b. count of its latest policy meeting when it cut funding costs for banks. an true sheets of morgan stanley is still with us. an true, looking at whata pan as done today and the steps it has taken, i want to ask you how strong you see a risk of deflation globally? andrew: i think the risk of deflation this year is very high. it's almost baked in given how weak the growth is. going to be in 2020. but i think the real question is probably looking out into 2021, 2022, is it more likely we get a deflationnary or disinflation air outcome or inflationary outcome and i think an inflationary outcome is more likely. that's view we have at morgan stanley, the view of our economics team. i think it's driven by the unprecedented policy easing we're seeing out of central banks, the unprecedented stimulus and the fact that we do think growth will be better by 2021, 2022, to chose some of that output gap and drive more inflationary measures to market. nejra: if the deflationnary pressure becomes powerfu

we have the european central bank's lending this week with a survey how banks are seeing how they areerforming, and what is interesting is you saw banks expect to ease lending conditions to companies over the next three months. normally when you have a recession, banks are desperate to tighten lending conditions to businesses. the credit easing policies we have seen launched by the central bank and government do seem to be having the desired effects. loans in march to business the across -- businesses across the euro area were up strongly. it is early days but it does look as if these policy mechanisms in terms of getting liquidity into the real economy have so far in the euro area been successful. they deserve some credit for that. matt: we will keep you with us. neville hill, chief european economist, credit suisse aboutties, talking to us the great pandemic. coming up, strategist expectations hit rock-bottom among the highly volatile earnings season. we will look at the opportunities next. this is bloomberg. ♪ welcome back to "bloomberg markets: european open." we are 36 minutes aw

they have to make some central bank decisions. think the biggest issue is in the emerging markets. everyone is focused on the u.s. might -- em markets might be hit quite badly. only seen about 100 countries apply for imf aid. are.ds on where you it is going to be best in the u.s. and better in china. china.better in francine: i want to talk about emerging markets. what is your case for inflation going through the roof? nikhil: it will not. people are going to be more careful with their money. people have talked about the fed's policy of $1 trillion and how that is going to increase money supply. not in the medium-term. i think we are going to be cautious when it comes to conception. people will save it. i am not in the camp of inflation. to separatee got zero cap inflation. i would say that for the next couple of years you will have not much cpi. i think they are going to have that again but i am not in the inflation camp. francine: if we see a negative w t i again, what does it tell us that the recession is going to be worse? do

debt to on the balance sheets of the central banks so you know there's $100.00 trillion dollars to go that stock markets are booming in particular sectors it's particularly in the banking sector a member of the p.p.p. program from the feds it all went to j.p. morgan 1st they took their cut which was substantial like 20 percent or more and then whatever was left over they dole it out to. your service and presence in america here paula is like you know people indulgences give us so we give you $10.00 if you give us $50.00 in banking fees says jamie diamond i'm the pope of bad money i'm the pope of fia jamie diamond my god what a crook well you know they continue to print apparently the u.s. deficit the budget deficit will hit 4 trillion dollars this year i remember the shock only just recently in the last few years here on the part of when the u.s. budget deficit hit one trillion and we were like oh my god like this is the end but apparently it's going to go to 4 chilian that's why they're borrowing 3 trillion but they're saying all of this infinite fiat's is going to cause infinity war

when will central banks need to ? frederique: let me start with your first question, and thank you for this opportunity. it is going to be bumpy. we don't expected to be back to its pre-covid level before february 2022 and not until its potential before the end of 2022. we expect demand to recover. social distancing rules will be in place until a vaccine is not only available but distributed widely, and there is a lot of testing and tracking in place. riskpect there will be a aversion from consumers after this tragic event, and a lot of our consumption is social in nature when we go to restaurants , shopping, and the like. the service sector has been disproportionately impacted in this recession, so i would expect less pent-up demand than otherwise would the case. for instance, when the economy goes up we will have one haircut , we will not have three haircuts we would've had during the duration of the lock down. back innd turn them terms of supply, there will be -- demand in terms of supply, there will be damage to t

aserest rates will not go up it evolves because the central banks.e recovery disappoints, you will see central banks looking at the balance sheets and it could move into targeting the fixed income markets. the range of outcomes on bonds is driving the partial range of outcomes on safe havens. francine: we are just getting a headline, germany's two-year bond sale is the strongest in 13 years. what does that tell us about european government bond issuance? john: it tells you that as extraordinary as the issuance would be, because the deficits are the largest we have seen, is still a lot of demand. whether that is as a hedge or reflecting conservatism, it could be a lot of things. it is very hasty to be bearish on government bonds simply because supply is booming and the economy will be picking up and there is a lot going on. tom: john normand with j.p. morgan. now in new york city, here is ritika gupta. ritika: china's coronavirus outbreak, they are afraid there could be a second wave. will hand tested nearly -- who reported 206 new cases. there 76 day

does this for i am sadly this is above all a political failure of the european central banks hands at time by politicians it's not allowed to bankroll of financially support the member states but on the other hand there's no common financial policy this conflict will require a political solution. it's not helpful that other countries which were told to leave gracile such as poland have applauded the decision of the german court. chancellor merkel has so far only said she wants a clever response to the questions raised by the case that response could have a big impact on the future of the euro and her government has been given just 3 months to react. well they say necessity is the mother of all invention and that's something many businesses are learning during the krona virus crisis to germany small wine makers are having a tough time with the loss of tourism due to the pandemic their solution is to go online if there's germany's oldest wine growing region the most. family have been here for generations. from the us i'm from i find that just incredibly exciting that i can sell what i'v

response, the central bank saying their unprecedented challenge from the pandemic and it is quarterly policy report and avoids excess liquidity, flooding the economy. instead, it will maintain liquidity at a reasonable level. saudi arabia has announced austerity measures, tripling value added tax, alliances for government workers according to state media. are being taken as the coronavirus pandemic continues to hit global oil demand after a historic route impresses. global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. coming up on the show, the worst is yet to come. minneapolis fed president neel kashkari says the unemployment rate is really around 24%. congress needs to step up. this is bloomberg. ♪ that is the numbers are, and they are very bad and historic, they understate how bad the situation is. >> this jobs report today is full of heartbreak, hardship. >> some of this looks to be temporary layoffs, three quarters of it, but that doesn't necessarily make it any better. >> if you look at who i

francine: what could they do, if you actually look at, you know, central banks around the world, it seemsike the bank of england maybe works closer because of the set up with treasury. the u.k. so far has been able economicnow, stump the slowdown somewhat or at least make companies safer than in other parts of the world. stephen: it comes from the treasury rather than the bank of england. the rates themselves have made a contribution to this. you come back to this idea of huge fiscal stimulus, increases in government debt, what you're basically saying is the companies, you know, stay in business, we will support you during these difficult times. you can reopen when we begin to stall out, you know, a little later, into next year. but as far as monetary policies go, i think ultimately the bigger effects are likely to come through either from the central banks running into by government debt, so keeping yields very low, and giving the green light for the government to borrow increasingly large amounts without causing difficulties in adjustability. in the bond market. also, because chairman j