can we expect more bold action from the ecb today >> it is widely expected, the ecb scale up the purchase program by up to 550 billion euro the current rate, the 750 billion euro package initiated in march is running out of fire power in october that is probably not the right signal given of the eurozone that might shrink by 8% according to estimates by the ecb. estimates at 0.1% that is clearly close to danger territory that it could contract we'll get a bold move from the ecb today. also given other commentary from other central bank governors influential in the governing council who were saying it is not the time now to see. it is the time to act and we need to get a bigger package of course, we want to hear we need to hear more about the point of flexibility for constraints from the german court ruling christine lagarde, b the ecb president said that they are undetoured from deploying the program at full flexibility. also saying there is no such thing as a key for the program it is important for the market to hear that again and again given all the abundance of the bond issues which w

ecb and christine lagarde. lisa: the interesting thing to me as we are not necessarily seeing the emergency in markets. as tom was sand, we are going to get the release. we got thoseget, u.s. initial jobless claims every thursday morning. how quickly are some of the people getting rehired? how much are these numbers understating the situation given the discrepancies we are seeing? so many questions, but hopefully we will get a glimpse into potential recovery. -- jonathan: we will bring that data to you at 8:30 eastern, just ahead of that news conference, with ecb president christine lagarde. we had down to washington to catch up to kevin cirilli, chief washington correspondent. of course general mattis gets the headlines, but arguably, the substance came from secretary esper. precisely. i spoke with a source who is very close to former secretary mattis yesterday, who reminded between --ention that the tension between matti s and trump predates this. secretary esper telling reporters there were some disagreement

francine: another shot from the ecb. the central bank has been boosting its emergency bond buying program. some investors say anything less would cause a shock similar to market selloff. experts break with trump. the former u.s. defense attack onopposes the protesters, and others issue skating attacks on the president. and beijing, when it comes to the proposed security line in hong kong, the latter saying it will maintain security and division. good morning, everyone. this is "bloomberg surveillance." i am francine lacqua here in london. the market is actually pausing a little bit. if you look at the global stock seen, it isve pausing for breath today. the dow rebounding. the dollar actually rebounding from its weakest level since early march. treasuries are pretty much study. backup of 1% for the first time since march. a lot of the focus on stagnant asian, and a lot of the focus on the euro, depending on what the ecb does. the ecb plans to boost monetary stimulus, and of course we will look at jobs and employment data

up next, we will discuss the ecb stimulus bazooka. this is bloomberg. ♪ matt: welcome back to "bloomberg markets: european open." this is the european open. minutes away -- 48 minutes away from the cash equities open, but we are seeing gains across equity index futures, and big moves in fx this morning as well. this after the ecb intensified its response to the unprecedented contraction facing the euro area with a bigger than anticipated increase to its emergency bond buying program. the central bank yesterday expanded its purchase program by 600 billion euros and extended that program until at least the end of june 2021. christine lagarde said action had to be taken. >> we judged that it was necessary to increase the size. there was a unanimous view in the governing council that action had to be taken. in the face of the inflation outlook, and given our mandate of price stability, action had to be taken. by the chiefjoined economist at bnp paribas. thank you for joining us on this friday. what do you make of christine lagarde, the ec

the ecb is paying the borrowers to take out a loan.ltro is also set up so the more a bank borrows, the cheaper rate it gets. as for market impact. one side benefit is banks can use tltro as a carry trade to buy higher-yielding assets such as italian or spanish government debt. breaths --elp this depressed yields and narrow spreads. they do not need to borrow money through the capital market when they can borrow it on the cheek from the ecb. guy? is supercheap. thank you very much, indeed. it does come with significant risks of the european economy. seema shah of principal global investors is still with us. scarlet says is used to pump into the economy. europe relies on the back channel as a transmission mechanism. however, the carry trade is a banksensive story for likely to put a lot of this to work. how effective is this tool in boosting european growth? margin, it should be. some of this will find its way to the real economy. for a lot of lenders, they can still be concerned about the outlook of the economy. they do not want to be l

ecb fightingee an being un-american. how does the bundesbank and the core economies, how do they react to this new anglo american-like central banking? jonathan: i think they've got to go all the way. fromd some pushback germany's court several weeks ago. and they've expanded qe with a pandemic emergency purchase program. this is a much more possible -- programrk where they can do a lot more and wait it just a little bit differently. italy, to yourin paper is 0.173%. we basically cut them in half and the last five minutes or so. help our american audience. we all understand that the labor model of europe is so different than america. do they have the grimness of unemployment we are going to be talk about in 25 minutes? jonathan: absolutely, and there is much more pain on the periphery of the continent as there has been over the last 10 years. i think what we have seen at the ecb is that they are willing to do a whole lot more to support the periphery, to keep the bond market wide open. what we need to see on the continen

only one option for the ecb today.he central bank is seen boosting its emergency bond buying program by 500 billion euros. some investors say anything less would cause a shock similar to marches selloff in peripheral debt. falling in line. hsbc and standard chartered both back to beijing when it comes to the proposed security law in hong kong. the latter saying it will maintain stability in the region. we are just under an hour away from the start of cash equities trading. let's take a look at what futures are doing. we see red arrows, albeit small red arrows. ftse futures down 2/10 of 1%. dax futures unchanged right now. we are starting to see you as futures actually turn higher -- u.s. futures actually turn higher. dow jones is rising. s&p and nasdaq futures still down. it looks like we've had some incredible gains. it would be pretty amazing if discontinued. the market doesn't want to selloff. anna: yeah. we talked earlier about whether this is a number of rally. it seems to limp on. let's look at the gym and functi

the ecb's stimulus. this is bloomberg. ♪ anna: welcome back to bloomberg's "bloomberg daybreak: europe." i am anna edwards alongside annmarie hordern, who is in new york. responsentensified its to the unprecedented contraction facing the euro area with a bigger than anticipated increase to its emergency bond buying program. the central bank is expanding its purchases by 600 billion euros and has extended them until at least the end of june 2021. christine lagarde -- i can assure you that there view in theous governing council that action had to be taken. in the face of that inflation outlook, and given our mandate of price stability, action had to be taken. lagarde oftine course. let's talk to the hsbc global asset management, global chief strategist. very good to speak to you this morning. lagarde christine saying the decision was unanimous. do you think the market was convinced by a clear communication story from the ecb? is the message fully and loudly understood by the market? >> good morning. nice t

you're right, the ecb will be very important. jonathan ferro made clear to me the optionality that madame lagarde has is extraordinary. we've got claims at 8:30 washington time, new york time. that will be a precursor for jobs day tomorrow. all of this is overwhelmed by the historic moment. all i can tell you, just one vignette, francine -- it was extraordinary to see the handwritten note by the chairman of the joint chiefs of staff yesterday, to his officers and his troops. that was truly an historic moment. francine: we will spend a good amount of time talking about the military, given what we heard and general mattis esper. let's get to bloomberg first word news in london with leigh-ann gerrans. leigh-ann: good morning, francine. as you were discussing, president trump's former defense sayingry, jim mattis, is the president misuses the military and is dividing the nation. he also said the country must reject those who make a mockery of the constitution. president trump responded to mattis on twitter, saying he did not like his

does the ecb need to do even more because of inflation?velyn: when the ecb announced they extended it in time, that is a very good move. stronger headlines then we would have expected. when we look at the core inflation protest, that profile is very flat. below 1%. the forecast for the ecb now. it really makes you worry. we have received may be to counteract very short-term, very big downside risks to core inflation. even if that were to get us back to the pre-coronavirus profile, the pre-coronavirus profile was not exactly stably back towards inflation targets either. very clearly, inflation expectations are falling victims to an extent to what is happening in the euro area today and the lack of attention the ecb is currently may be giving for the inflation target. have in theiry actions. our view is that the ecb will have to act again in september or december at the very latest if they want to avoid really that inflation expectation re-anchor. at an even lower level than they were lingering around before we had this latest very big shock

bondscus is also on because of what we heard from the ecb, and in the u.k. a lot of the focus is on exit. we expect a briefing in two hours on brexit. tom: it will be interesting to see the jobs report, francine. i see all sorts of numbers modeled. 6 rate be looking at the u . i do not see any forecast of where that statistic is going, but it harkens back to an american job economy of 1933. francine: we will have a big look on whether we will go back to those depression years. let's get to first word news in london with leigh-ann gerrans. francine, andd, tom, as you were saying, today's jobs report expects to see the u.s. unemployment rate surge to almost 20% last month after reaching the highest level since the great depression in april. the may report is likely to show the jobs slump has extended into white-collar positions. by 7.5s publicly shrank million positions. the jobs report comes out at 8:30 new york time. in buffalo, new york, two police officers have been suspended after a video of them pushing an elderly protester to the ground went viral. the

the ecb has stepped up its pandemic stimulus program.ional monetary policy adds to the commission set up a plan for a 750 billion euro virus recovery package, but within lead now joining the frugal four nations opposed to the e.u. plan in its current form, will europe be able to agree on a way forward? joining me from brussels is paolo gentiloni -- paolo gentiloni, former european commissioner for the economy. thank you for giving us a little bit of time to our broadcast. the commission said there would be a 7.7% contraction in output this year. since then, economies have reopened. would you stick to that forecast, or could it be better or worse? i think the forecast was reasonable. this was the baseline. at the have risk downside and even with the better situation. for the time being, this forecast is rather reasonable. the ecb has a similar forecast with 8.2 negative growth this year. the real question mark on this forecast is what we are predicting as a rebound for next year. we are predicting forecasting a seven, or six points, and t

and how much more the ecb can do.t seeing any incline towards anymore negative rate but i'm not sure why this emergency program will not be extended potentially even beyond 2021 and potentially pop up again to make sure there is enough ammunition there. manus: the one thing that struck me in the conversation is -- for once, europe, monetary and fiscal policy may well outgun both the u.s. and japan. come on eileen into your notes and i see that you believe the valuations and be more fruitful. banks were up 17% last week. up 60%. were in terms of your presumptions, valuations remained extreme. is this one part of your core call? our views. one of the valuations on european financials have been very much disconnected on the downside. they were extremely cheap. we have started to see the catch up. the proposal for the recovery fund. the european commission proposal. and now the ecb continued to add to that. seeing yields rise a little bit which can only help. it is alsorspective, a medium-term outlook that changes where g

the risk is disappointment from the ecb.ost says there is a risk that they might not give a target on growth inflation. the dollar down 1.5% in the past five sessions. that will them on the dollar seems to have halted. there's a new risk. to the oil market. there you go. will they have an opec meeting or not? oil comes back by 2%. 10 year bonds on the futures. a little bit of bit in the futures. cable rolls down by one quarter of 1%. the bank of england said, prepare for a no deal brexit. sterling dips on the back of the dollar flipping around. 12541 is quite a staggering delivery. hsbc and standard charter are the two british institutions. they domino hong kong's banking system. they back beijing in a standoff over the proposed new security law. the bank statement came on the eve of the anniversary of china's 198019 amid square crackdown. with the u.s. ripped by violent protests. the timing highlights growing tensions amid the coronavirus pandemic. called ong activist the community for support. economic freedom is being bet

what are investors hoping for for the ecb?gwoo: the euro will be in focus since they hold the rate decision meeting today. the central bank is boosting its purchase program. a far it has seen less than third for 750 million euro already allocated. the euro has rallied pretty rapidly. investors would be keen to see whether they can sustain the rally against this. i think anything short of any stimulus could disappoint the market gains that we have seen. that was our mliv asia editor. coming up, moving closer to reality for hong kong. we will speak to pro-democracy let's come member next. ♪ >> the economic freedom is being threatened by beijing. i think now is the critical point not only seek support for the general public, it's also important to have protests. >> hong kong is the best place to do business on the one country to system. we need to see the same. i would say people in hong kong, sooner or later, will realize the national security law is not against one country, to system, it is designed to make sure that one countr

you think the ecb gets there as well?arilyn: certainly in terms of the ecb, they do have a much harder job because of the different economies involved, because some are faring much better than others. i am sure there are behind closed doors discussing the percentage of buying high-yield bonds. the market is focused on it. there huge debates around that. yet, but itot there is likely something they are thinking about and discussing behind closed doors and something the market will continue to be focused on. in terms ofdo more expanding the asset purchase program. it can do a lot more. the difficulty it has is given the definitions involved it is hard -- given the different nations involved, it is harder get to get that agreement. in the u.s., the fed can just do it. alix: the massive issuance we have seen in europe. record,ion, hitting a do you buy it? marilyn: the market in europe has been very supportive by the ,cb and different programs being the backstop buyer at the fixed income market and supporting the equity market

the ecb will double its bond purchasing program to $1.25 trillion euros the ecb president christine lagarde ses they still face a contraction of 7% this year. they don't expect inflation to rise leaving it far below the 2% target she said she hoped the boosted bond buying will steer inflation back to pre covid levels >> collectively determine that the 600 billion should bring us over time significantly close tore what i have called the pre covid inflation path while allowing us to monitor how some key impact our policy. so we will understand a little better how the economy rebounds in the third quarter and then later on in the course of the coming months. to have a bit more clarity >>> it is all systems go in equity markets in europe seeing very strong gains across the board hire the ftse mib up 3.3% spanish stocks rally leaving the overall stock market higher. the dax up about 4.4% and trading about 1.4% higher as well this is all interesting because yesterday, in the immediate reaction, we saw the stoxx 600 end the day lower. it was a very choppy session we were trading lower in the lead

can the ecb do it? adam: i think you are right, but i do not think it has to be thought of in terms of the gap. there are fundamental reasons why the european monetary authorities would do less than the u.s.. first and foremost is on average overall in europe they have done a better public health job of containing the crisis than the u.s. has. public health is the main impetus. not the economic. there is less need for the ecb. a second issue is the automatic stabilizers in terms of unemployment and how money gets to small businesses and workers. it seems to be more efficient in large parts of europe compared to the u.s., which makes sense. they have more experience running a welfare state than the u.s.. that offsets how much more the europeans do. the ecb is a much more bank centric system with much less issuance of securities for the size of the economy than the u.s.. the fed's budget sheet is the result of them intervening in many markets whereas the ecb are -- there.ou kind of took us that is a good

now the ecb jumps in.rases tossed around bugbear throwing money in -- around like they are throwing money in a joint effort. ing in germany called this economic policy fireworks. she was quoted saying, this is huge. haslinda: whatever it takes they say. now the focus turns to the u.s. jobs report again. what is expected? kathleen: millions of jobs lost again in the month of may. and, not quite as many. the unemployment rate getting to levels we have not seen since the great depression. payrolls were down 20.5 million. may, expected to be down 8 million. not quite as bad. maybe it shows the worst is behind us. unemployment, 14.7 percent in april. one little small bright note. average weekly hours, 34.3 in may. average hourly earnings expected to run around 8% year-over-year. usually, they are like 2% or change. lower wage workers have been laid off. there is a lot of speculation around the payroll. jobless claims still high. declinedayroll has much less than expected in may. maybe that means a million means

some of the demand the ecb is providing. see 10 year yields down to about 155 basis points or so, really coming in. use our record demand for the bond sale today. italy really coming out with a strong sale. i want to widen this out to what this means for italy as we take a look at the ecb tomorrow, because italy has been buoyed by the e.u.'s 750 billion euro plan ; --pport all the regions regions' comeback. they have bought a larger share of italy's bonds then the size of the population. the capitald by economics cheap euro economist. the ecb seems to have one decision, and that is to extend and further that stimulus. is that what you are seeing? andrew: yes, it is. a number of the senior members of the ecb governing board have said very strongly over the last week or so that they intend to extend and expand the program. we are guessing it will be a 500 billion euro increase on top of the 750 billion that has already been announced. they don't actually need to do it immediately because they've only used about the third of th

and enough from the ecb. policymakers are tiptoeing into a deep debate on more seamless, some warning that inflation risks are too high. we will speak with jean-claude trichet this hour. good morning, everyone. this is "bloomberg surveillance." i'm francine lacqua, here in london. tom keene in new york. a clear reversal when it comes to the cautious outlook that the fed outlined yesterday, partly due to the number of infections rising in the u.s., it also partly due to the rally we had last week. tom: those are the two big stories francine, there is no question that the chairman ended the debate about a v-shaped recovery. amy that will happen, maybe it will not. he made -- maybe that will happen, maybe it will not. ,s you rightly mentioned francine, today the pandemic is again front and center. it is without question a different thursday than it was a week ago thursday, even two weeks ago. once again the pandemic worldwide, and in selected states in america, really is front and center. francine: it certainly

the ecb is involved in many areas. as it is developing internal andctives, interim targets, one of those is stabilizing financial conditions. is, essentially is what it something they are looking at, effectively targeting it, the financial conditions. step two, trying to achieve the inflation target. alix: so this ties into the conversation guy and i have been having all week, how the markets are ignoring all the bad headlines in the u.s., and if the ecb continues, does that persist? when does this come back? they can never exit, now. i think how we go forward from here in terms of financial markets really is dependent on as wee pandemic pans out go into the second half of the year and 2021. questions like, will there be a tions asound of infec we head into the northern hemisphere winter? will we develop a vaccine, to real gdp growth normalized back in the post-covid world? there is some indication that maybe it's going to be a different than normal thing in the future. markets are recovering with a sharp, sharp bound

for the ecb, this is a big move. it increased its bond purchases more than expected and also extended it by six months. that was not expected. it also announced it would be reinvesting the bonds that were maturing over the course of the next couple of years until the end of 2022. that is interesting because normally the ecb is somewhat beholden to its t. -- two its capital key. that is determined by the size of the economy. the ecb can viable bonds, meaning they have to buy german bonds and french bonds and italian bonds. the ecb has been moving away from this capital low key a bit. the investment program means they can even things out by reinvesting the bonds rolling off. they do not have to buy up bonds according to the capital key, they can sort that out later over their reinvestments. the more they step away from the beital key means they can more active buying bonds for the countries that needed and that is the most important thing they announced today. david: what was the urgency? everyone expected it. a lot of

we'll be back to you in a moment i want to bring you a couple of fresh comments out of the ecb. they have given a current update on the account and on their operations so the ecb says other major central banks are set to reduce the frequency of seven-day u.s. dollar operations from daily to three times a week operations continue to be offered weekly the ecb also earlier this morning weighed in said no funds were borrowed. $264 billion euros were deeped just in the current account surplus says versus 27 billion euros in march let's get back to annetta. do you want to weigh in? >> i first have to look at those flashes. what i understand is that the ecb is reducing the amount of liquidity they are injecting in those specialized operation, which could be good news at least when it comes to the assessment of how strained the financial system is. from that moment in time to the story. back to you? >> thank you for weighing in live on the news getting it back to a couple of stocks this morning. lufthansa to hold talks with the government germany's airline staff union says it is confide

not only now turn to the ecb but washington where u.s. employment data will signal the extent of the damage to jobs and that will move the markets. tom: very good. welcome again all of you, worldwide and we must look first to america. kevin cirilli joining us, our chief washington correspondent. what will the president do today? he has been quiet on twitter in the last 24 hours. kevin: i think we will hear more from president trump today, especially now that there is this open discussion about the use of the military and his comments regarding that. yesterday i spoke with a former senior advisor to a cabinet member in the intelligence community who told me essentially that the president's comments this week, particularly pertaining to the military, has sparked open discussion about the president's strategy, tactics and rhetoric. beyond that i spoke with a republican member of congress who said the president still very much enjoys the support of the republican party in both the senate and the house even as a handful of republican senators

they are paying you to borrow from the ecb. bank under the sun which is eligible, which is all of the banks in germany and france you would think might avoid it, they will be coming in. everyone will come funding. we are even seeing people buying back zero rated debt because why would they want to have expensive funding on the books? it has the potential to be huge. it shows you the european economy is dead. i suspect it is more likely to possibly double the amount that is maturing, close to 1.4 billion, may be .5 billion if some people expect this is the deal of the century -- may be 1.5 billion. very little restrictions at all. what you do with the money is the key thing. it is called targeted, but they are not anymore. alix: i always count on you to bring optimism into the conversation. i am teasing. what did they do with this? what today buy? marcus: they are supposed to. ro's they ared lt supposed to lend it to -- with practical reality, it will go straight back into the government bond market, the carry trade, investment

but the ecb is definitely keeping a close eye on the euro. weaker euro would be stimulating for the region and the economy and we know mario often pushed back at euro straits. down the road, look for jobstine lagarde to perhaps a bit lower down the road if the euro continues to levitate. guy: we are going to leave it there. thank you very much. we are going to carry on with the coverage of what is happening here in just a moment. this is bloomberg. ♪ from london, i'm guy johnson. this is the european close on bloomberg. this figure out what is happening. we have the classic trade coming in today, the dollar is weakening, sixth straight day. a massive moves in btp. during this more, longview's economic ceo. people are talking about it being a bazooka, some people were saying that they wouldn't go anywhere near as far as he did. what do you make of that? >> there's clearly a bit under and itde in the market, was more than people expected. it was another big bazooka. i don't know how many big bazooka's one can produce, but it seems they pulled a

happens if the ecb -- at ecb level? a lot of this recovery is dependent on the central bank.t happens if there is a legal challenge? patrick: as lagarde mentioned, they are undeterred by the german constitutional court ruling. it doesn't seem to be stopping the ecb. the guard has learned, she said she didn't target spreads early -- lagarde has learned, she said she didn't target spreads early. she has become quite savvy. the ecb is going to fill its role, continue to buy bonds if there is a court ruling against it. i am sure they will find ways around it. that she has aed deflationary backdrop and all of europe. they do have to take measures to promote the economy and stem off that deflationary risk. lagarde is very savvy. the policy here in place. just adding up all the programs in place. up to the balance sheet over $7 trillion which will be 60 percent of gdp. it is very stimulative. i expect that the occur for the next several years. francine: where d.c. value? -- where dony value you see value? do you see any value? patrick: i prefer swiss bank in europe. we bought equiti

expecting more from the ecb.ly investors and economists are expecting the ecb to be more bond buying. italy moments ago getting a record 85 billion-euro order for their 10 year bonds. we have seen a lot of appetite in general for the issuance of european bonds, so i am looking forward to my conversation with matteo renzi, the former of italy. let's get to first word news in london with leigh-ann gerrans. unrest is continuing across the united states overnight, and president trump has come under harsh criticism for his response to the demonstrations. he is also not getting the backing of local governments threat to usee's the military. it is being planned for charlotte, north carolina -- the president wanted it moved due to coronavirus restrictions. put in place by the state's governor. the president did not definitely say the gop were pulling out of charlotte, and did not definitely say which other cities were under consideration. france says there will not be any tax hikes to pay for economic stimulus. taxes are

that is called staying in lace you saw what the ecb did, shock and awe. we're not bashful here you want the states to get help. do you think that's the one thing we need to do? >> we have protected household balance sheets disposable personal income up in april. likely up for the quarter as a whole. the balance sheets we haven't protected are for states and localities they're going to do another round of economic contraction. no fault of their own. they balance budget requirements giving them money is one of the most effective things we can do macro economically that we haven't already done. >> also at the time that you wrote that piece you said it could be a democrat's nightmare that the economy recovers before the election do you think this makes you as someone who probably leans that way, do you think you're less worried that it's going to be a nightmare scenario for democrats? >> joe, i'm a real believer in financial markets. i think they always get it right. joe biden's probability has gone up from 43% to 54% on predicted in the last three days serio

the ecb is watching the euro carefully.trengthen,ues to watch for christine lagarde to take a page out of mario draghi's book and jawbone the euro lower. taylor: you will be leading our euro coverage a. we are getting a lot of comments about yield curve control. what are we waiting to hear about that? the fed already has nine lending programs that it introduced to fend off the pandemic affects on the economy. you can argue it does not need to launch any more programs at the moment. financial conditions have made a v-shaped recovery for the most part. been clear about not going to negative interest rates. but the federal reserve is thinking ahead, and it is never too early to start debating the merits of perhaps new measures. yield curve control is appealing. instead of setting the target for the overnight lending rate, and letting the market set the rest, the fed would target a long-term rate, thereby keeping rates lowered to stimulate the economy, support businesses and consumers. in world war ii, the federal spente did ju

it would be a fantastic thing for the ecb to do.t would -- they would probably be the hardest to persuade. in the spirit of never letting a crisis go to waste, one of the considerable challenges of the whole life of the eurozone is that we are just an inflation target with this just below 2% type thing with what the ecb does. because germany will not accent inflation above two, it essentially constrains a lot of members -- italy being the classic 1 -- of not having any nominal gdp growth. it is not a permanent, sensible state of affairs. , in the, the eurozone spirit of not letting a crisis go to waste. issome ways, tom, the u.s. duee to it with the fed monday, of course. tom: these are incredibly important comments by lord o'neill, and we will continue to discuss. earlier this week, without question, the most heated conversation we had was with kenneth rogoff with the bricks falling down from the wall of the emerging markets. lordll come back with o'neill and speak on emerging markets, and the challenges that they face. they don't

interesting to see with these minutes from the ecb, if we get pushed back, or clues about how the ecbnst german court rulings. some think this will tie the hands of the ecb and its ability to support markets in the future. what do you see? i do not think we will be tied to the ecb too much. the ecb needs to provide more evidence, and they have not provided enough for the program they are doing. they need to come up with a reasonable amount of evidence. i think the response has been proportionate, well-received by markets, and they could come up with good evidence. it might tied her hands in the future if inflation starts to but that is not something we see likely in the next few months. perhaps later on in the cycle, but right now their response has been a portion it. on the imfve a chart story yesterday that was shocking, it showed 40 years of global growth. only discounting 2009, which was unchanged. then a forecast of 5% drop. fact wes to life the have not seen a global contraction. this will be something we have not seen in our lifetimes. do you think central banks and governments

last time the ecb kept policy on hold, slightly disappointed.said, it really depends on the data coming out. rebounding, which is a good sign. it may well could be a second wave. european trade tension, which could potentially derail some of the early recovery that we see and the sentiment in the markets. i think if there is more of that the ecb would deliver more because the markets would be asking for more. nejra: right. how much more upside do you see to the euro then? i thinkeah, so again, it really depends on the economic recovery. euronk that could be versus the dollar. it is primarily because the u.s. dollar has more potential to strengthen in the medium-term, we think. i think the interest rate differential is not a driving force at the moment, so i think if our expectation is a global recovery, we think the u.s. dollar as a safe haven would be less in the amount, so that is why it would drive the dollar growth. is more exposed to trade. trade will be the very first thing to recover. constraints are being relieved. the euro area should b

i would feel comfortable that the ecb and the commission have those kind of tools in place.so much, from j.p. morgan asset management. this is what i am looking at across the board. european stocks are pretty much flat. "bloomberg surveillance" contains -- continues in the next hour. tom keene joins me out of new york. ♪ francine: seeing red, wall street has its worst day and months. the s&p plunges nearly 6%. futures are higher this morning. fears of a second wave. houston weighs a new lockdown as the city says coronavirus cases are getting out of hand. treasury secretary steven mnuchin argues the u.s. can't shut the economy again. and freefall -- the u.k. economy shrinks a record 20% in april, rounding out a difficult week for the prime minister amid mounting criticism over his handling of the crisis. good morning, everyone, and "bloomberg surveillance." this is "bloomberg surveillance." i'm francine lacqua, here in london. tom keene in new york. there is focusñr on what we sawn the markets the last couple of days. juckes, i did kit the same thing he did in his morning not

that is for sure, that has been announced by the ecb.t, the focus has been stated by the governing body, will be on the t20. that limited overs cricket because that financially is what supports the counties in many ways and the focus will be on that if they can't play domestic cricket, that is the cricket that will be played. whether there will be spectators is another question of course and that is going to be one i should think will follow other sports and all those questions we have been discussing so much over the last few weeks and months. what i would point listeners and viewers towards is looking at the ecb's guidance on things like refund and what they see like refund and what they say at the moment is that everyone with tickets for matches later in the year to sit tight, wait to see how it all pans out with the various ideas and schedules that may come into fruition and wait for counties to get confirmation of how that will work. at the moment it's a bit of a case of waiting to see how things play out but certainly they are look

the ecb meeting, we will bring you headlines.e're waiting to see if there is news of additional stimulus. in germany, a $1.5 trillion stimulus package has been approved. in asia overnight markets were mostly higher, take a look. more freedoms were stripped from the people of hong kong. lawmakers did pass that controversial bill that makes disrespecting china's national anthem a crime in hong kong. this as protesters marked their 31st anniversary of tiananmen square overnight. as you see, the shanghai composite was lower, hedge sensinhang sengwas down a fract. tropical storm making landfall. cheryl: the storm is now heading towards the gulf coast of the u.s. this weekend. forecasters predict it may dump 30 inches of rain before making a turn to the north where it could hit the u.s. as a hurricane. also, increasing winds over the gulf of mexico going to drive high surf to the beaches of the gulf coast, particularly from louisiana to southwestern florida, generating dangerous ripcurrents and local flooding. well, the world's largest

it would appear the fed is hitting the mark where the ecb may not be. srikanth: our preference is for u.s. over europe in the current point in time. coming into the last couple of years, the thinking was european corporate have been more conservative with respect to usage of the balance sheets. right now, the way we would frame this is, the fed's direct intervention -- it will not be the same magnitude as the ecb with corporate bond purchases -- but it is more than a backstop, a credible safety cap for u.s. investment grade. coming into the back cap of the year, the corporate mindset, even in the u.s., will start to shift to a more credit friendly outlook, focusing more on balance sheet repair. that is leading us to be much more constructive with respect to the u.s. markets compared to europe. vonnie: thank you so much, always great to have your thoughts. the head of corporate strategy for u.s. and europe at morgan stanley. the bloomberg global summit hisst -- invest some of happening right now. in june where the long climb, and you equated the richmond

kroszner: certainly the ecb has decided to do more proactively.nk that is important because inflation expectations are slipping down in the eurozone. there has been discussion of the possibility of negative euro's -- negative interest rates in the u.k.. in the year of -- in the u.s., the fed wants to avoid doing that. it is trying to do that through i thinking programs and those lending programs are likely to expand considerably. they haven't got nothing ground yet so i think there is room for expansion there. i think they will purchase a lot of assets. francine: thank you so much. a former federal governor and professor.l -- the markets are focusing on u.s. jobs a little bit. the focus of the market is a lot more in terms of stimulus for the monetary side but also the fiscal side. the other thing tom and i are watching his brexit heads. as the latest round of talks between the eu and u.k. have ended in a stalemate. there is also an oil story. if you look at the price of oil, it is set for its sixth weekly gain after opec-plus reached this tentati

the first thing is, yes, benefits -- italy benefits from the ecb like all banks.nk you are right to worry about the longer-term growth and the reforms that need to be done in italy but also the other countries. that don't like the idea monetary policy somehow should be set to force the hands on the politicians. this is not democracy. the central bank has given the they react and i think the ecb has done a very good job at that. francine: is there any chance that italy will need a bailout out of this? erik: everything is possible in life but i am sure that if italy or any other country in europe needs a bailout of some sort, it is because of insufficient national politics. it is not because the euro system is incomplete. so long as the country including italy is playing along with european politics, there is no such risk, but of course the andtical fabric can change crazy ideas about alternative life can emerge and then you never know. tom: erik nielsen, that you so much. right now in new york city with our "first word news," here is ritika gupta. ritika: the new y

the ecb last week -- the ecb meeting last week only supported the rally. where that rally goes from here because of the interesting have lists. of thehat do we make moves in bond markets at the moment? this deepening we have seen. thele talking about whether fed will have to address that later this week. qued the: it has pi interest of a lot. this was previously unthinkable. very experimental in even for the bank of japan but now investors are more willing to consider the idea. the steepening we have been seeing in the yield curve in the u.s. and in general does seem like a bit of a return to normal functioning in bond markets where you see a longer steepening as a response to what we have seen from the central in terms governments of monetary and fiscal stimulus. , that "normal" times would be a perfectly reasonable reaction. but of course we are not living in normal times by any means so it is worth questioning what is driving that long steepening beyond the usual inflation driven factors. matt: thank you very much for joining us. kristine aquino who lea

and enough from the ecb. tiptoeing into a deep debate on more seamless, some warning that inflation risks are too high. we will speak with jean-claude trichet this hour. good morning, everyone. this is "bloomberg surveillance." i'm francine lacqua, here in london. tom keene in new york. a clear reversal when it comes to the cautious outlook that the fed outlined yesterday, partly due to the number of infections rising in the u.s., it also partly due to the rally we had last week. tom: those are the two big stories francine, there is no question that the chairman ended the debate about a v-shaped recovery. amy that will

it's a big day for the ecb. today we saw a record bond auction, tomorrow it's a big christian -- a big question. the market is certainly anticipating stimulus and you can see a volatile situation. still with us, what are you expecting? whether the issue is expanded, from a market perspective, what's really interesting is that the fed went unlimited on buying treasuries, the challenge is that they did not go unlimited, now they had to find tune, and this could be a dramatic increase in the purchasing power , which is going to be a little difficult, particularly in terms of how difficult is for the market to interpret whether they are doing something they're willing to do. by farer your question, the most important issue has been what they are going to say around this and the willingness to support markets. alix: the markets really expected and they want to but why do they needed? less than a third has been spent, so why expand it now and why not wait? question,t's a good only about a third of the firepower has be

measuresalso the ecb that are starting to have an impact. we've seen the largest pickup last week in operations, long-term financing. nowpolicy part of it is taking some real shape and that is the first point. the second is going back to what we were discussing before. we think so far the way the virus has been dealt with in europe gives us some hope that the restart can be stronger in europe and it is possible to do it without -- according to our analysis, without big risk every reinfections.of make sheer up relatively more attractive than it used to be relative to the u.s.. francine: what things do you like in europe? do you go through bombs because of the noise we heard about the ecb in terms of fragmentation of what they are buying or do you like equities? jean: we were already positive on credit and bonds in europe given the significant policy response globally that we've seen coming. what has changed is it is broader and. -- end. we are considering the equity side of things because of what you just mentioned. bonds were already an asse

manus: in europe ecb policy makers tiptoed into the debate -- just days after the ecb doubled the bondprogram. member bothe board the inflation outlook deteriorates. the bank of italy governor echoed by saying the central bank is so active because inflation expectations have declined. speaking with francine lacqua, he started by commenting on the outlook of the italian economy. take a listen. clear there have been a number of statements. -- and it is right, it is a long time. firms arenot because lagging behind. certain monetary policy cannot increase. level reasons to increase the level of demand, there is the possibility of the employmentng back to sufficiently. it is not a substitute for measures that increase the rate innovation, and all the improvements the economy needs now. >> what is your opinion on italy using efm funds? a number of people have been asking that question. testimony in parliament two months ago, before the covid. comenk these funds now without strings attached. have --ear that they the only requirement. this asd not consider manna. this is. a loan. . the market

got the ecb on thursday.ectations are they are going to add to their pandemic program , potentially up to 500 billion euros. do you think the ecb is going to deliver? do you think other banks will provide stimulus? nathan: we will see more stimulus from central banks. ecb needs to expand their purchasing program almost in the sense of running in place. issuance been so much of government debt to support the stimulus put in place that the ecb needs to be more aggressive than originally thought. it's purchases just to maintain its presence in the market. similarly we will see over the next few months the federal pivot from market stabilization driven qe to dual mandate driven qe. the fed is increasingly concerned about the performance of inflation and i think that the fed will continue to bring its tools to bear to address the lack of inflation and to the fact they are failing to meet by a large margin their 2% inflation target. finally many of the emerging markets felt a powerful hit from the globalnd slowdown

coming up, we will talk more about the ecb. referencing it stimulating the economy. the ecb says their bond buying program is the best way to do just that. more on that. this is bloomberg. ♪ ♪ matt: welcome back to "bloomberg markets: european open." into the, 13 minutes session and we are seeing gains of almost 1% on the ftse, almost 1% on the cac right now. looks like markets continue to be risk on after we saw gains in the u.s. last night and then gains throughout asia overnight as well. let's get the bloomberg business flash. these are today's top corporate stories. visa and mastercard considering revoking wirecard's ability to process payments. the move could cause further pain for the fintech firm that already faces an accounting scandal and bankruptcy. wirecard helps firms around the world accept electronic payments from customers so it's relationship with visa and mastercard are critical to its business. not a lot of people love doing business, financial business with a company that is filing for protection from credito

we've talked about i the ecb on board again and adding to their program now.iscal and monetary policies are 27% u.s. is now at 44% of gdp. this is how long and potential, a huge potential tail wind for risk on stocks but you have the reopenings happening and it looks like it's successful so far. we'll keep an eye on that and the economics data is not good, but it's getting incrementally better and that's important. plus you're hearing companies like ebay and general moe tors saying things are absolutely opening up in may versus april so therefore you've seen the worst behind us and all these policy moves can help stocks going forward, so yeah, i think that does help the value trade at this point. >> well speaking of reopening, las vegas taking a major step in the path forward from the pandemic today casinos opening their doors on the strip with extra precautions in place contessa brewer has been monitoring that story for us >> hi there. yeah, considering all that las vegas has been through in the last few months, strong demand surprised a lot of people. the do

continue for six months longer than expected through at least next june it could be longer if thehe ecb judges that the crisis has not yet passed we could see some more stimulus as e early as seseptember. may deposit rate was kept on hold at negative hahalf a percentage popoint t to encourag ending spending. not easy also report its forecast. growth walking downwards once again producing an eight point 7% control. your ball i read a lot 5%% yeaear the ininstallation cd. b but thankso the person target six to stay below 1% until. twenty two that car estimate. unlike in the s. or japan and easasy cannot lelegally directly finanance governrnment stimulus s spending cuts instead of f a round round about way. of supportining it memember states who are themselves standing up to a trillion euros. indeed indeed mastic mrc programs skin help keep borrowing costs for both governments. and companies love. committee as a to see you thank you much indeed for the business that kate would be our business at a time. people in hong kong have been defying a ban to turn out and commemorate the end of the