Transcripts For BLOOMBERG Bloomberg Markets European Open 20240713

Italy overtakes china as the country with the most coronavirus deaths in the world. Gains in france and spain. Removing the red tape in america. President trump says he is working to speed up approval for treatments as teva rushes to bring a malaria drug to patients. California orders its residents to stay home. Rush hour refuses to submit to saudi arabias Oil Production plan. The kremlin sees riyadhs move as blackmail. Is there more turmoil ahead . Just under an hour away from the start of cash equity trading across europe and in the u. K. Lets take a look at futures. We are seeing some decent gains in european futures, Even Stronger than what we see in the u. S. You can see euro stoxx 50 futures up 50 , as of the futures for dax. Take a look at u. S. Futures. More than 2 gains with nasdaq futures up 3 . If you take a look at the big drops during the recent crisis, the nasdaq has fared far better than the s p and the dow jones. Today looks like it will do better in terms of gains as well. Investors may be developing an appetite for riskier assets. European and u. S. Futures pointing to positive sessions and theins in asia, dollar has halted its eightday rally. Lets get into the markets with kristine aquino, head of the end mliv blog. First off, on Dollar Strength, it has been incredible. We are seeing a gain today. Does that mean we are having a risk on session . Kristine for today, the question is how long will this last . The main reason for the Dollar Strength we have seen over the last few sessions is the mad rush for the dollar and demand for dollar funding. A little bit of respite from that. The question is are we out of the woods . If now is the time to call it out of that sort of situation just yet. Matt we are just getting headlines. The bank of england is canceling its 2020 annual bank stress test. A group ofd prudential policy measures in response to the virus. It is not a surprise. We saw the boe active last night as well. Central banks are on call 247. Iss the kind of policy this the kind of attentiveness that is giving markets a little bit of room to breathe today . Kristine it certainly helps that for markets and investors to see that Central Banks are watching the news very closely, being very proactive in terms of their measures. There has been a bit of a delayed reaction to the action we have seen from banks simply inause the markets have been for quite a while before we saw Central Banks reacting. Now that they are catching up, markets are responding to that as well. The question now is whether there is doubt in markets about the capacity for Central Banks if this downturn gets worse. But there is also the question of, it is a Monetary Policy response. Not exactly a fiscal problem. It is a Global Health issue. It can only be addressed by those measures, to some extent. Also seeing red headlines come across on Deutsche Bank. Lets give viewers these headlines quickly. First off on marks spencers, they are warning on profit and pulling its dividend. Probably not a surprise, given what we have seen other companies do recently. On Deutsche Bank, we are seeing a new edition to the board. Deutsche bank is adding the ceo boerse to its board. Deutsche bank, which is also out with its annual earnings, although there should not be a lot of surprises in those numbers today, is saying the ceo weimar, willeodore be joining the board. The news coming fast and furious this morning. You dont have that feeling of anxiety in the markets, with the exception may be the oil patch. I have seen this headline cross from russia earlier, and i thought, wow, this story just doesnt calm down. Moveussians see riyadhs out of saudi arabia as blackmail and refused to give in. It is not difficult to imagine Vladimir Putin refusing to give in. He is a man who does not like to lose. What do you make about the current state of relations between the two Biggest Oil Producers in the world . Kristine it doesnt look great. I think there is a lot of potential for this to continue here. It is a real problem for oil markets as oil prices are a story steeped in the politics of it all. At the moment, all the indication we are getting from both sides that there is not going to be a compromise anytime longer the issue [indiscernible] demand is expected to weaken massively this year because of the virus impact. It is putting all those things together. It does not spell good things for Oil Prices Moving forward. Matt thanks very much for that, kristine aquino, who heads our mliv team for the em ea region. On your bloomberg terminal. It has been an incredible resource throughout this crisis, throughout this downturn. I want to give you a little bit of a clarification on the Deutsche Bank headlines. The ceo of Deutsche Boerse, theodore weimer, has been appointed to Deutsche Banks board. That is to say, the Supervisory Board, not the management board. There is a difference in the two bodies in terms of the german corporate structures. Coming up, italy has overtaken china as the country with the highest recorded death toll in the world from the coronavirus. We will give you more on that. Remember, Bloomberg Radio is live on your mobile device. If you are in the london area, tune in on dab Digital Radio. Do tune in. This is bloomberg. Matt welcome back to Bloomberg Markets. This is the european open. 50 minutes away from the start of trading in europe and the u. K. We do see futures up about 3 on average across the major indexes. Italy has overtaken china as the country with the largest recorded death toll from the coronavirus in the world. Despite much of the continent being locked down, the pandemic is gathering pace in spain and france as well. Europes industrial par heartland here is feeling the heat. Business confidence in germany has plunged the most in almost three decades. Now, governments across the bloc are enhancing containment measures, trying to stem the tide of the virus. Joining us from zurich is the cio for germany at ubs Global Wealth management. Thanks for joining us. Let me first ask what you make of the plunge in confidence. We have obviously seen a plunge in risk assets and even a plunge in safe haven assets. Have we found a little bit of a bottom here . Max good morning. Irst, under macro economics, dont think it should be too surprising to anybody that we are seeing a significant drop in microeconomic activity. Ultimately, that is exactly what governments across the board are trying to achieve here, trying to contain the virus by aggressively reducing microeconomic activity. That is in the price. What is more important from now on is whether or not this reduction in microeconomic activity is permanent, or whether it is temporary. That is where all the measures from Central Banks and fiscal policy come in. Our take is a risk reward for risk assets on the six to 12 month horizon, which looks decent. The issue is we cannot yet or dont yet feel very confident aggressively going long risk assets because we have not seen a peak in two infection rates in europe or the United States in new infection rates in europe or the United States. Matt do you feel confident that european leaders are doing the right things in order to bring that turnaround . It seems there is still difficulty in getting enough tests, even in the richest countries on the continent. It seems travel restrictions have not helped a lot. What needs to be done in order to bring that change forward . All, thethink first of starting point with europe was a much slower one than we saw in asia. Nowcymakers have by understood how important it is that they act swiftly and also act most importantly with a focus on ensuring liquidity in the system and ensuring that small and mediumsize inner prices enterprises can bridge any working capital issues in income issues after going into these containment measures. That is happening as we speak. On the fiscal side, we need more of that and we need more specific examples of that. On your question with regards to containment efforts being successful or not, when you are looking at the daily percentage increases in the number of new cases, what we have seen from italy as well as spain over the last few days is we have seen a reduction in this increase in percentage terms, which bodes well for the forthcoming days and potentially weeks. We are not there yet, but then again, we have only just started outside of italy and spain to see much more testing going on and see containment measures being implemented in a much more aggressive fashion. Matt may be moving in the right direction then. What do you think about the activity here in berlin . We saw a speech by chancellor merkel a couple days ago, wednesday night, i believe. It was pretty moving, but she did not offer much in the way of real policy action. We have not really seen very much in the way of real policy action from schulz or outlier yet either or altmeier yet either. How will that work . Guest when you are looking at governments response in germany, that is focused on a three stage approach. First, they focus on the Health Sector to deal as best as possible with the rising number of cases and to limit the contagion. Second, the target measures aimed at maintaining employment. To your point, the third part, which is implementing the support package, we have not seen that yet. But on the other hand, what you could say is do you need to see that right now . Maybe a fully fledged School Support package would be counter productive to stimulate demand when Health Policy is trying to reduce demand. Such agoing to see fiscal support package . Are we going to see more targeted measures to ensure liquidity for companies . Our view is yes. As usualin europe, also in germany, all of this takes a little bit longer than what we have seen in asia. But we think we are getting there. Matt anecdotally, older wealthier germans are hoarding everything from toilet paper to cash. Around my neighborhood in berlin. In terms of your clients and investors, what are they doing . What moves are they making, if any . Guest i have not asked him about whether they are hoarding a lot of toilet paper at the moment. It seems to be very popular at the moment. What we are seeing is because many of these clients are also entrepreneurs, many of them have family. They are not only concerned around them. They are also concerned about the companies, also very much concerned around what is happening to their own safety and the safety of closest relatives. When speaking about investments, many of them have gone through various crises. They tend to take a longer term view and see crises very much as opportunities. What we are starting to see here is on the one hand them looking for depressed assets, which are sold off because people have to deliver in are scrambling for much ind that is very several areas. What we are seeing is the other side. When people are trying to buy protection in the options space, for example, they are willing to sell that protection because it is overpriced in order to enter the markets at lower levels. There has been little panic. There has been more of a focus on what do we have after this crisis . After this crisis, we are going to have longer valuations, lower oil prices, finally some form of growth stimulating fiscal policy, and we are still going to need productive assets in order to obtain the minimum goal of preservation. Many of them are starting to look beyond that shortterm volatility. Matt we are going to talk more about that in a moment. You are going to stay with us. Maximilian kunkel from ubs Global Wealth management, our guest cohost for the hour. The oil price i want to focus in on now. The war that has been roiling Global Energy markets looks set to continue. Russian president Vladimir Putin will refuse to submit to what the kremlin sees as oil blackmail from saudi arabia. That is according to bloomberg sources. We are joined by our intrepid oil reporter Annmarie Hordern in new york. Focuses in onine the fact that the heads of these two countries, mbs and Vladimir Putin, are two gentlemen who do not like to lose. Annmarie exactly. I think it is clear by this incredible scoop by our colleagues in the Moscow Bureau that putin will not back down. People close to the matters say he has been the leader of russia for two decades. He has been through this. He is someone who does not back down in the face of political or economic challenges. We have seen this time and time again. A showdown with erdogan on syria, sanctions on the annexation of crimea on the west. This is someone who is ready to weather the storm. It will be hard for russia. Their budget is for just over 40 a barrel. We are well below that. But they have been building up their reserves for this. We have seen already the impact. There is weakness on the ruble today. We have the central bank in russia having an emergency meeting and they will have a press conference after that, potentially taking action. It will be rough for them, but the message is clear. Putin will not be the first one to blank. The first one to blink. Matt Annmarie Hordern on oil. It is an incredible saga, and we did not show you nymex wti oil, pointwas up at one 36 yesterday. We will look at the Biggest Record outflows from investment debt. Investors withdrew billions from highgrade bonds as the global route intensifies. More on that with Maximilian Kunkel next. When you are traveling to work, tune in on Bloomberg Radio live on your mobile device or dab digital. This is bloomberg. Welcome back to the european open. Right now, we are about 38 minutes away from the start of cash trading, and we are looking at gains. 3 and more of gains across the major equity Index Futures right now. Lets turn to bond outflows, and what we saw yesterday. Investors withdrew a record 35. 6 billion from Investment Grade bond funds for the week. That as the Global Market rout from the spreading coronavirus intensifies. Withdrawals from corporate Investment Grade debt blew through the previous record, which was the week before. This is according to data. Ubsmilian kunkel from Global Wealth management is still with us. You alluded to this a little earlier. Investors are selling some things that you might expect them to keep in order to get liquid. Is that what is happening . Max that is what is happening, exactly. What you just indicated is we are seeing the main driver of this. By the way, when you look at what has happened with treasuries as of late, the main driver is investors who need cash selling the only semi liquid asset they still have. You could argue that on top of that there is a building fiscal stimulus and helicopter money narrative that is adding to this because people then think we getet through some inflation down the line. The key at the moment is investors scribbling for cash and selling the one liquid asset they have. Matt at what point do you think we will see these kinds of assets . Gold dropping below 1500. Now it is trading just over that. At what point do you think it is safe to go back and buy these typically safe haven assets . Max we are not really seeing that huge dislocation in some of such asr assets, Investment Grade debt in the developed market. What we are starting to see is andere dislocations advising clients to build up positions in areas such as emerging markets, sovereign debt, or u. S. Highyield debt. That is where we are seeing the dislocations. Looking at u. S. Highyield spreads currently, above 850 basis points. Historically, with spreads at these levels, returns on a 12 month basis have been positive in all but one case with medium returns around 25 . When looking at emerging market sovereigns, you have spreads close to 600 basis points. When you have that over a 12 it is close to 20 . For people who do not necessarily need the liquidity, for people who can in the face of illiquidity and a lot of technically driven volatility maintain positions, we would advise them to start adding in these areas. Matt it has been a pleasure having you. Maximilian kunkel, cio for germany at ubs Global Wealth management. The u. K. Some parts of grind to a halt due to coronavirus, one chain says it plans to stay open. We will talk to the owner, tim martin, the chairman and founder of jd weatherspoon. This is bloomberg. Welcome back to Bloomberg Markets. This is the european open. 30 minutes from the start of cash equity trading across europe and the u. K. You can see that futures are up and gaining. We are moving higher, now up almost 5 on equity Index Futures, coming from less than 3 when we started this program. It looks like it could be a risk on friday to end the week. We did have some Deutsche Bank headlines as they hold their annual press conference today. Deutsche Bank Management is waiving claims to its performance pay. Not reallyso may perform as well as expected this year. They say the virus may affect their ability to meet financial targets, which is not a surprise, but good to hear. They also appointed the ceo of Deutsche Boerse to their Supervisory Board. There are a lot of headlines coming out of Deutsche Bank. Lets get the first word news. For that, we go to leighann gerrans in london. I have got to break in because i am not sure about you, but i could not hear her. We are also getting headlines across right now from nordisk bank. The committee does not roll out a further rate cut after cutting its policy rate by 75 basis points down to 25 basis points. A big rate cut out of the Norwegian Central Bank, 70 five basis points down to 25 basis points. They do not rule out another cut. They are joining a long list of Central Banks around the world that have given us emergency or scheduled cuts in the past week or two. The Norwegian Central Bank cutting rates. Lets zero in on what is going on in the u. K. Because a loto, of parts of the economy have ground to a halt. And from everywhere else in europe, you would expect that famous english pubs would be closed. I cannot go into a bar here, for example, in berlin. I cannot go into a nightclub that the city is famous for because they have been shut down. Not the case in the united kingdom. One gentleman, tim martin of Jd Wetherspoon, is with us. We will talk to him in a moment and get you details on that, and also ask him, as he is a famous brexiteer, what he makes of negotiations right now, considering the two lead negotiators are either positive for coronavirus or at least isolating themselves because of that. A lot to come from tim martin hopefully very soon. Lets take a look again at futures this morning, as they are on the rise. We saw European Equity Index Futures that were down that were up a little bit earlier, less than 3 . Now we are looking at 4 games, at least on the cac. Up ftse and the dax almost that much. It looks like it could be a risk on day on this friday. I want to get a little more on the Deutsche Bank story. We have been telling you that they have a new Supervisory Board member, and he is the ceo of Deutsche Boerse. They also say that the virus may affect their financial targets this year. That is not exactly a surprise, but it is the kind of thing you need to hear from germanys biggest bank. They say 2020 Group Revenues will be slightly lower, and they they being the Management Team have waived their claims to performance pay. Lets get to a guest on this right now to talk a little bit more about what is going on at Deutsche Bank, the key of ahe codirector big lab. What do you make of the headlines, the annual earnings picture we already knew most of the details. Although the fact that the virus will possibly hinder them from reaching their financial targets is not surprising, it is still a concern, is it not . Guest yes, Deutsche Bank is the weak link in european banking. Withs been challenged restructuring plans. It is huge. The hiccups and liquidity are affecting the rest of the european banks. Forget, they have injected 3 trillion euros into the european Banking System in order to ensure that this is on the rise. What we saw today, i dont think it is a surprise to anyone, the comments we have seen, but we need to be careful in the coming and how the regulator will react to all that. More how will the ecbs accommodating tiering or policy help Deutsche Bank, and how do you expect Government Programs to help them as well . Guest if you look at the measures the company has taken, on the one hand what is for sure is negative rates are here to stay and will stay for more than five years. That means the ability of banks such as Deutsche Bank will suffer in the coming years. But against that, what they have also done is the liquidity equivalent of nearly 50 of the corporate needs in europe. They are creating a framework on loans to corporateand andeholds to corporates households. They are also releasing 300 billion euros in capital, in case losses arise. The weak links of europe will survive. Lets not forget, the bundesbank to the First Central Bank provide unlimited liquidity to its Banking System. On the one hand, accountability will be nonexistent, but on the other hand the system will move along. Matt is this going to be a nationalization . Do you expect the German Government to take a big stake in Deutsche Bank . Guest i think that nationalization is a very low probability. Nationalization with a Balance Sheet that is at risk. If what the ecb has ingested will be sufficient. That is my view. Before,om what you said i assume you dont think the bundesbank will stand in the way of these ecb policies because although lagarde seems to be extremely accommodative it is not typically in the nature of them to be that dovish. Guest Deutsche Bank was created 150 years ago to support governments around the world. Everything they have done has been in order to support that. The bundesbank may matt next, as some parts of the u. K. Grind to a halt due to the virus, one chain says they will stay open. We will speak to the chairman and founder of Jd Wetherspoon. This is bloomberg. Welcome back to the european open. The are less than 20 minutes away from the start of cash trading. It looks like we will get a little bit of a bounce for friday. And a 4 es up 4. 5 , gain on dax futures. Some parts of the economy in the u. K. Have ground to a halt due to the fight against the coronavirus. One pub chain plans to stay open. Is not shutting at stores unless the government tells it to. With a chain of nearly 900, they are feeling an impact. They say they plan to retain half it staff, but is canceling as interim dividend. Martin,us now is tim chairman and founder of Jd Wetherspoons. Talk to me about your refusal. You must be feeling pressure to close pubs, although it has been pointed out to me earlier that hong kong did not close any of its pubs. I wont you . Tim hong kong, singapore, taiwan, south korea. They have been very successful in combating and have not closed their pubs or restaurants, as far as i am aware. There are no real social pressures. Think it is a matter of common sense. Not be that people are standing cheek and jowl in this sort of environment, but people believe it should be open. Supermarkets are incredibly crowded at the moment, and the pubs are very empty. Will implement measures, nobody standing at the bar, paying by credit code, washing down surfaces, and so on, there is no reason they should not stay open with minimal risk. I dont think a complete lockdown is a viable proposition. Matt but do you not expect the government to order a complete lockdown soon . It has been ordered and a lot of other places, including the state of california. Is ai dont think it viable longterm policy. I think they should minimize the risk, and people are not stupid. They know the risk. People need places to go. If they want to have a coffee or a meal, you cannot just shut all of london down. For example, the airports have asked the pubs to stay open. You can see it with crystal clarity that they need the service. Parliament has not shut. And business has been ongoing. Matt the pubs in parliament, are they still able to get drinks . Can you still get drinks in pubs . In parliament . Tim i dont know about drinks in parliament. You must be able to. They have got several hundred people around. You have to be able to get drinks there. Matt let me ask you about your staff. I just read that you want to keep on half your staff, but Boris Johnson and receipt soon said and richey soon act they will stand by employees and workers. They do not want to lose any jobs. Will you have to let people go . Tim i want to keep all of our staff. The sales might well half. You have to take into account the economic reality of it. Our pubs have not lost many staff. But tens and thousands of staff have been laid off in the pub industry. To maximizetay open staff retention. Do you expect the government to help out the staff that will need to replace wages, those who are leaving wetherspoons or not getting paid by your pub . Tim i really dont know. It is a situation that is changing day by day. Pitifuls were extremely a while ago. And week, they were low, the last three or four days. Everyone is looking at the same situation and trying to work out what to do. So i cannot give you a direct answer on that. Let me get your take on something else. The brexit issue is one you championed. We now see that both of the lead negotiators one of them tested positive for coronavirus. The other is selfisolate a. Do you still expect that to get done this year . Tim i hope so. I dont think there is any reason to delay. I think it has been turned into an unnecessarily complex situation. Like paul simon said, get out of the back, jack. Dont get out at the end of the year. Eliminate tariffs. We will all be better off. Matt thanks very much for joining us. Tim martin, chairman and founder of Jd Wetherspoon talking to us about pubs and his hopes for brexit as well. As turmoil continues on, bml says too many market watchers are being driven by emotions, not by the fundamentals. Here with your morning call is dani burger. Dani this is an antimorning call. Someone who says all these dire doomsday calls from strategists and Market Players alike are really not accurate. People are looking at the stock market and saying there is a lot of carnage going on, so i need to react, i need to update my forecast right now, and there is a dire outlook. It is taking a jab at the looks of bill ackman, who says the u. S. Will enter a depression era if things continue as they are. People who have had similar calls like goldman sachs, he says that now you need to stop, breathe, and wait, because we do not know how long this crisis will continue on. He says at this moment, there are pessimistic forecasts, they might be right, but it is a lot of gut punch reactions we are getting and it is feeding flames to the fire. Over the long haul, if you look 20 years outcome of the relationship between global gdp and stock Market Performance is not always so clear. Matt thanks very much for that. Dani burger with your morning well, i guess it is still a call. Thanks so much for that. We are minutes away from the open, 11 and 15 seconds to be exact. The oil battle is escalating. President putin says he refuses to submit to what the kremlin sees as black nail by saudi arabia. More on those developments next. Remember that Bloomberg Radio is live on your mobile device or on dab Digital Radio in the london area. You can actually hear leighann gerrans there. This is bloomberg. Welcome back to Bloomberg Markets. This is the european open. About eight minutes from the start of cash trading, and we are looking at pretty positive futures here on a friday. That is no relief or someone who has been long the last couple weeks. Decks futures up by more than 4. 5 , cac futures up by almost 5 . The oil price were looks the Oil Price War looks set to continue fo, or maybe it could come to a close. Russian president Vladimir Putin will refuse to submit to what the kremlin sees as oil lack mail from oil blackmail from the saudis. On the other hand, the kremlin is ready for contact on oil. To figure out which way it is going to go, lets bring in Annmarie Hordern. I saw these two headlines and thought on the one hand, they are saying, we will not talk to them, that is blackmail. On the other hand, they say, we will talk to them. Annmarie i think they will not be the ones to blink first. If the saudis pick up the phone and say we will not swamp the market anymore, i think they are open to that dialogue. The point of this scoop from our Moscow Bureau is the fact that the kremlin will not be the first one to want to do that. They are calling it blackmail from the kingdom of what saudi is doing by cutting Oil Production prices and cutting production and their export numbers. Part of that plays into the fact of who president putin is. He has been at the helm of russia for two decades, and we have seen him time and time again be able to withstand hardship, even if it will mean significant losses, because he will not submit. Matt we are showing this shows nymex crude. The Global Benchmark is brent and this is what putin and mbs are fighting over. What trump wants to buy is west Texas Intermediate Oil from the u. S. Producers who are also getting hit so hard by this price war. Talk to me about the u. S. Aspect of this story. Annmarie two major things coming out of the u. S. Yesterday. President donald trump says he is aware of the situation and has a lot of power when it comes to it, and as he will get involved at the appropriate time. When is that time . Who knows. He may be giving the saudis some leeway. Access, the third biggest producer in the world, is considering for the first time in half a century to curb their production. I looked at that and said, texas, do they want to become part of opecs plus . Matt it is very interesting. I had the same thought. Annmarie hordern on oil. The story is dramatic, to say the least. Traders are bracing for, speaking of drama, quadruple witching today. It is the day every quarter where options and futures expire for both indexes and individual stocks, hence quadruple. It likely adds more volatility to an already turbulent market. Here to explain is dani burger. Dani as if we did not have enough going on in markets right now, we have to deal with this iry. Ntic expert. Exper according to some, it will be trillions of dollars with of options that expire today. Usually on this question, we get a lot of volume as traders figure out, do i need to close out on my positions, hedge it, buy stocks, sell stocks . Scared a sign of how Market Makers are, the s p and dow jones usually rebalance on this day and adjust based on what stocks have gained and lost i, they said we are not doing it today. I have a chart to show how volatile this day might shape up to be. Open interest in options tied to the s p 500 is at a record. Never before have we seen so many hedges and options be put on the s p 500. This means there are a lot of traders who might be moving positions. Much for that. Ry bloombergs dani burger there on the volatility we could see. Coming up, it is the market open. Futures are pointing higher on this friday. This is bloomberg. Matt we are a minute away from the open of cash trading in europe and the u. K. Lets get your top headlines from the bloomberg terminal. The death toll tops 10,000, new data suggests coronavirus fatalities have hit five figures. Italy overtakes china as the country with the most number of coronavirus deaths in the world. Russia refuses to submit to saudi arabias Oil Production plan. The riyadh move as blackmail, but say also they are willing to talk. California on lockdown, the state orders its 40 million residents to stay home. A huge blow to the economy, it surely will. We are getting markets opening. Ow out of the gates on days with a lot of volatility you see a difficult open. Gains in futures, so maybe it will be easier. 1. 5 , gainsing out in the u. K. 3. 8 at theibex up open. Gains on the Iberian Peninsula as well. Thesee the euro stoxx 50, european bluechip index up 1. 5 . Those are the heavyweights across europe. We are seeing more stocks up than down. As you see the cac opening paris and the dax in frankfurt, expect green arrows for sure. Take a look at the move screen. Is quite high, 53 stocks gaining, eight down. There are 238 to open. Are swinging to the upside, adding point action. , two of the, sanofi bigger stocks. Andhe downside, swedbank ferguson taking points away, but there is little. The stoxx 600 is up. European markets are open higher as investors take stock of an unprecedented amount of stimulus from around the world. Joining us now is simon harvey, fx market analyst, monex europe. One of the interesting signals we have been watching is the u. S. Dollar. We have seen such incredible strength over the last two days. Today is down, the first day in nine. What does it mean to you, and where do you see the dollar headed . Simon yes, this is a sigh of relief for markets, but i would not read too much into it because so many different factors are in play. That japan isact having a bank holiday for the spring equinox is taking this pressure off of markets. Liquidity,of dollar a surge of u. S. Dollars is getting markets a day off to recoup and look back. Thed not pein this california shutdown, there is an automation of factors. You have to take every day as it comes. Is it are saying still difficult around the world to get greenbacks that everybody wants . Are there liquidity issues in the market . Simon definitely, you are seeing it from multiple Central Banks over the last 24 hours. They are going to defend their currency. Nordisk bank cut rates. The bank of england intervened yesterday because treasuries were going too far, and they came out explicitly saying the funding for dollars is causing the central bank to move. We will see this play out. The further we go along, the less pressure there is in markets. Matt we are seeing a little gain in the pound today. Not want to read anything into that as well . Is that just breathing room . Do you see the pound recovering are going down further . Simon we have highlighted multiple times to traders that you have to be cautious with the acord lows that will be significant pullback at some point as long as the frictions subside. In this climate we are trying to figure out the duration of the virus containment measures. Nothis market there is rational Market Pricing or basis you can pinpoint an accurate forecast. A month ago people were sarsinting that it is like in china. People were making growth predictions based on that. Then you had the Oil Price Shock and financial conditions that look like the start of the financial crisis. Much intot read too what people are predicting progrowth levels. Thin to makeoo forecasts. These are all likely to change as the narrative adapts in the coming days. Matt the last time i talked to you a couple months ago, i asked if you are not bored by the lack of volatility. Now it is obviously the extreme opposite. What is it like in your industry right now in the city . Way, i am it this glad we are working from home because we are closer to our beds. People are regretting going to sleep earlier in the night. They missed the ecb coming out at midnight. To wake up every morning looking at different programs and liquidity and Credit Facilities opened by Central Banks, and seeing extreme price action. Percentage points mean nothing anymore. You look for one percentage point, you have to go to the emerging markets or look to the pound for brexit performance. Now you see it in developed markets and it is losing its shine. We finally got what we wanted, and we are complaining it is too much. Matt are you concerned governments may overshoot in terms of fiscal stimulus and monetary easing, in terms of money printing and mnt . Will that we can any major currencies like the dollar . Simon not necessarily in this climate. Increased Government Debt is cheap. Some governments will not only increase spending, they are looking to refinance at these rates. You adapt these in. At the moment the fiscal response has been on a humanitarian level to give a level of support to the economy as it goes through this economic shock. Settles and it looks like we are going back to normal conditions, fx markets will be down to growth differentials, and how quickly the Central Banks can get away from the zero bounds. There will be complacency in action and effects, and i do not think we will see weakness in any currency, but the dollar has room to curtail off. Matt thank you very much for joining us today. Simon harvey, fx market analyst, monex europe, joining us from home because he can take power naps between the headlines. Coming up, conflicting messages. Forp touts a malaria drug treatment of covid19 patients. He said that fda approved it, but minutes later the fda said, no, they have not a proveapprovd it. That is next. This is bloomberg. Matt welcome back to Bloomberg Markets european open. 10 minutes into the session on this friday. We are seeing green arrows with the ftse and dax up more than 5 . The dax actually 6. 6 . I want to bring you breaking news on siemens, which is incredible. The company yesterday named a new ceo to take over. It says it has 57 coronavirus cases in one company, siemens. 41 of those are here in germany. It is a very big company, they have 385,000 employees. Siemens says according to the ceo that they have 57 confirmed coronavirus cases. Lets stick with our top story, donald trump has urged the fda to expand the use of a decadeold malaria drug and experimental treatment for patients with covid19. It was approved very quickly, and it is approved by prescription. Individual states will handle it. Doctors will handle it. I think it is going to be great. Matt the fda came out moments later and said the drug President Trump is talking about has not been approved for coronavirus treatment. , the french pharma giant, sanofi, has begun another Clinical Trial looking toward a Rheumatoid Arthritis drug. As a treatment for the coronavirus. ,oining us now is david loew executive v. P. , sanofi pasteur. Thank you for your time. What are the most promising drugs out there right now for treatment of this virus . David good morning. Comment on all the most promising drugs. Is there wasll you byreliminary study published a team in marseille which was a small study which is shown antiviral activity. We are doing the randomized trial because we think we need more data on this. Drug,ntioned the other there was also a publication with another drug which is demonstrated it can help suppress what patients go through when faced with coronavirus infection. Matt these are drugs that only help once you have the virus, and try to eliminate the stress on respiratory systems . David yes, that is correct. They are being used once you have an infection to treat you and tried to keep the symptoms under control. There were multiple efforts to get a vaccine. We have to be realistic, it will take more time because every vaccine needs to be tailormade to the circulating viruses. Of the have a subspecies coronavirus, covid19 which is circulating now. Ometimes viruses mutate that can be harmless and sometimes it can be harmful. Covid19 has the potential to be harmful. Companies ther we and many other companies are trying to make a vaccine solution as quickly as we can. Matt one of the most read stories on the bloomberg terminal is one pointing to the possibility that young people can also face severe reactions to covid19, or it can be a Serious Health issue. Are we misled by the idea that only people over 60 and 70 can be hurt by this . Look at thewhen you numbers in terms of percentages, we know the risk of dying goes 65 andificantly in above. That does not mean there were no cases below 65. ,emember, the position in china who started to ring the alarm bell has died, and he was young. On the circumstances of the infection. If you get larger exposure and a larger viral load, we have seen youngerately cases in people. It should not be underestimated. In western countries what we are observing is warnings given by the governments are not being taken serious enough. People still go to parks, they hang out with each other, and that is not something you should be doing. Matt let me ask you about the herd immunity, a question from coronavirus i get again if i recover from it . Is it possible exposure makes one immune or do we not know yet . Yet. we do not 100 know there are reports of reinfection. We need to be careful about this. It can be linked to the testing methodology. So it may not have been a reinfection. It is anecdotal evidence, so we do not know at this stage if people can get reinfected or not. Matt thank you so much for joining us. David loew, executive v. P. , sanofi pasteur, talking us through some of the aspects of potential coronavirus treatments. As we go to break, lets look at european Equities Trading higher with gains of more than 6 in paris and frankfurt. This is bloomberg. Matt welcome back to Bloomberg Markets european open. We are 20 minutes into the trading day and looking at 6 gains on the cac and dax. Amidst some pound strength, the pound up 3 against the u. S. Dollar. Lets get into our top stock stories. Banks and theu. K. Bank of england slashing rates to record lows and adding a billion pounds of assets to the purchase program. Deutsche bank up more than 6 . Headare looking to tap the as a supervisory chair, there is a lot of investor criticism. Agm, and hewent to was seeing a lot of investors coming up and having criticism toward him. Intercontinental up nearly 12 after an update in the u. S. Yesterday. ,he picture is becoming clearer they are drying the final dividend and plan to cut costs. They are needing this price boost today. It felt similar last year, investors have been hurling criticisms for years. Ceos, gone through four and the stock has come down significant lead. This is an interesting development. Us. N harvey is still with ins talk about what you see terms of the euro. You mentioned the ecb headlines, and there are a couple of interventions from the central bank. Effect is it having on the euro, and where do you see it headed against the dollar . A correction is long overdue. That Economic Impact going to be severe but it will be exacerbated. You can make multiple cases why this is happening. The ecb has less room. We are seeing a correction that goes back to fundamental levels. This could be argued by an increase in dollar liquidity which i will not read too much into. You could wake up monday and the dollar could rise again. The euro dollar going the opposite way. Trying to figure out where currencies are going at a time when the economies are in lockdown is a fulls game. We will not try to do it. It is a fools game. We will not try to do it. You could wake up monday morning, japan walks back in and you see a vacuum coming in for u. S. Dollars and everything sells off. You see equity markets selloff. Here and sayit this is where everything is going. You have to base this on some fundamental forecast on how economies will get out of this, and at the moment we do not know how long containment measures will be in place. If you look at german investor confidence, it has absolutely dropped like a led the biggest drop in three decades. It made me wonder what this crisis means for the European Union. Brussels cover and berlin cover with paris to strengthen European Union, strength in the monetary union, the wayhere concerns they were during the credit crisis around greece . Carsten yes i am simon yes i am hesitant to call at the end of the eurozone. Many people have failed trying to predict it. It is now going to go through brexit and the virus. It is a very established nnstitution and a established financial institution. It could strengthen ties especially as the response to , opposed to 2008, it has to be more synchronized acrosstheboard the board and financed in some sort of way. The financing of the stimulus is coming from is going to be a big question, and could increase debt for the European Union and create new entities within it to allow it to tap into emergency measures. Much fornk you so joining us, simon harvey, fx analyst at monex. Will continue the conversation with us on Bloomberg Radio. To an end to that at a 45 u. K. Time. 8 45 u. K. Time. Also on dab Digital Radio. Up next, the german chancellor considers calling an emergency over the virus. This is bloomberg. Good morning oh no, here comes the neighbor probably to brag about how amazing his Xfinity Customer Service is. Im mike, im so busy. Good thing xfinity has twohour appointment windows. They have night and weekend appointments too. Hes here. Bill . Karolyn . Nope no, just a couple of rocks. Download the my account app to manage your appointments making todays Xfinity Customer Service simple, easy, awesome. Ill pass. Matt welcome back to Bloomberg Markets european open. We are 30 minutes into the session. I am matt miller here in berlin. We are seeing gains across the board. Term of the far in equities markets, the stoxx 600, the broader equity index more. Han 4 , cold comfort but it is a gain nonetheless. I believe we are saying all sectors gain. Group look at the ggr, ranked returns screen, travel and leisure are up as well as oil and gas, and financial services. Everything is up. Defensive stocks are gaining the least with health care and utilities bringing up the rear. Lets get the bloomberg first word news. China ashas overtaken the country with the highest reported death toll from the coronavirus. Fatalitiesof italian has topped 3400 as the lockdown continues. Europe is the epicenter of the disease with france reporting a 41 rise in deaths. Spain has an increase of 28 . In the u. S. Four senators sold stocks in late january after receiving sensitive briefings on the coronavirus. They put their finances before their duty to protect Public Health. Chairman of is the the Intelligence Committee in the senate, and another member is the wife of the chairman of the new york stock exchange. Denied any wrongdoing. The coronavirus has struck at brexit trade talks between britain and the eu with both sides having negotiators in isolation. One is showing symptoms of the virus, according to a british official. On thursday, france counterpart Michel Barnier announced he tested positive for the disease. Californias governor gavin newsom has ordered all of the states 40 million residents to go to home isolation, the most stringent measure in the u. S. To curb the spread of the virus. It allows people to leave their homes for groceries in medicine, requires they limit social interactions. Business is not deemed essential are to be shut. In norway the central bank, reductionbasis point is the second time the nordisk bank has resorted to an emergency move in response to the coronavirus. It is the latest move in the wake of global easing to fight the economic fallout. Global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Much. Thank you very merkelchancellor angela has called the coronavirus the biggest challenge this nation has faced since the second world war. Her government is considering steps as early as next week unlimitedan increase in barring to stem the fallout. It is part of the parliament declaring an emergency. Chilling evidence that europes largest economy may be headed for its worst recession since the Global Financial crisis. Joining us now is carsten brzeski, chief economist, ingdiba. Let me ask you about the possibility of a recession. Longer asking if there will be one, but how deep and how long will it last . Carsten exactly. It will be a deep recession for germany. The First Quarter will be a severe contraction. The country is coming to a standstill. Almost in terms of what we have seen in 20082009, probably about 2. 5 quarter on quarter. In the Second Quarter everything will depend on if the lockdown situation will last until the easter break, then it will be rather muted. If it lasts longer, we will have another severe quarter of contraction. , thell this year environment has penciled in 2 contraction of the german economy. It is still rather on the upside. Matt i am not sure how it feels there, but here in berlin it feels like we are in the early innings of this. Do you expect it to last much longer . Carsten i expect it to last longer. Walkingsee people around in bigger groups. I thought earlier this week there were tables and chairs outside to enjoy the sun. There is a rumor the government will meet this weekend to decide on government emergency on increasingalso the lockdown situation. We will move toward the french, belgian, austrian situation next week. Everyone has understood the severity of the situation, despite Angela Merkels speeches on wednesday. Matt if you close down those cafes and things like jims and gyms and cinemas are shut, that does mean a loss of revenue, a loss of jobs for many people in this economy. How quickly do you expect the government to get them financial help . Surprised by the swiftness of the government reactions now. We have been talking so much about when will we see fiscal stimulus in germany. Finally, unfortunately, we have a severe crisis and the government is acting. Yesterday the government announced a support fund for freelancers of 40 billion euro. It is already severe. The shortterm work schemes they put up is putting support into the economy. From this, there will be more coming. It will be to mitigate the crisis, and we have more support for the loss of revenue and income. I am positively surprised by the swiftness of the government actions. Matt what more do you expect in terms of longerterm fiscal spending . Are you expect a package . Is this a chance for germany to upgrade infrastructure, switch people in cash to digital payments, move the way governments operate . Carsten you could argue people do not touch the atm because they are afraid of getting the virus. Whichl get the next phase will be more fiscal stimulus. The second phase will be more compensating schemes for the loss of revenues, people unable to pay their rent. There will be another wave of fiscal stimulus. The third wave will realize there is a lack of digital, we might move toward a cashless society. All these structural topics which we have been discussing the last couple of years could be accelerated and sped up due to this crisis. I would assume even after the first and second days of the imminent crisis, we will see a third wave which means more spending, more investment in digitalization and infrastructure. Matt we heard the german radioe minister on dfr talking about the possibility the government buys stakes in companies. Do you expect Deutsche Bank, iher big German Companies do not want to say get nationalized but to become partly owned by the government. . Supposed tom not talk about individual companies, but when you look at the situation and the Insurance Industry and the airline industry, there will be some of stake guarantees, then depending on how long the shutdown or lockdown continues, yes, there might be this option of temporary nationalization of big companies. Initially everyone was talking about the support, but now there are big German Companies which are extremely vulnerable to this kind of unprecedented crisis. I think we will see more unprecedented measures from the German Government. Matt thank you for your time, carsten brzeski, chief economist, ingdiba. Best of luck and health to you and yours. Up next, the oil battle escalates. President clinton will refuse to submit what the kremlin sees as blackmail by saudi arabia, but they are also willing to talk. More on the latest developments next. This is bloomberg. Matt welcome back to Bloomberg Markets european open. We are 43 minutes into the trading day and looking at solid green arrows. But theand cac gaining, ftse is putting up a 2 gain. The Oil Price War that is markets,oil global president putin refuses to submit to what he sees as blackmail from saudi arabia. On the other hand the kremlin said it is ready for contact if saudi arabia wants it. We are joined by an reporter. Annmarie hordern when i look at those conducting headlines, i am not sure if is saying i will never get up putin is saying i will never give up. he is saying he will not blink first, but he will not pick up the phone and call the saudi crown prince. The devil is in the details. An incredible scoop by our Moscow Bureau. Vladimir putinho is. This is a man who in the face of social, political, military hardship has never given in. We saw it with sanctions in the west, we sought with erdogan, and he deals with power plays. The meeting last june was redundant, president putin came out with a meeting and announced the entire deal. He is called the Worlds Energy czar, and he is living up to that title. Matt some have even theorized he successfully interfered in the u. S. Election. Certainly he was able to annex crimea. What do we know as far as the u. S. Participation in this oil love triangle . I heard reports the kremlin was happy about the price war because it helps to push u. S. Shale producers out of business. Donald trump wants to buy oil there because it is cheap and it can help local producers. Annmarie we have already seen moscow try to hurt shale. Texas is considering cutting production, that is huge. Shale is feeling it. We are seeing downgrades and a lot of these producers. Shale is feeling it. If texas cuts production, that from be a massive win moscow and riyadh. President trump said he is aware of the price war and he has control over it. He said he would get involved at the appropriate time. We will see when that is, i have ideas, but we have to wait. Matt thank you very much. Lets talk about a company that it does weight not use oil, they are just an app. Uber surged after telling investors that it will have billions of dollars in cash at the end of the year even in its bleakest estimates about the prospects. The ceo spoke exclusively to bloomberg about their ability to withstand potential losses posed by the coronavirus. The edge Case Scenario we outlined assumes the world would be down 80 for the rest of the year. What we are seeing with hong is a big hit, but once the Health Authorities get , lifel of the situation does return, and when life. Eturns, uber returns in hong kong we have people go back to work, then people use our Services Like they always have. The healthe authorities, the cities, the governors, the president s all of the world are making the hard decisions and the necessary moves to control the virus, then eventually life will come back, and when it comes back, they will start using uber. Saw aike in hong kong, we drop and slow recovery. There is no reason we will not see that even in a circumstance where you are down 80 , we will still have 4 billion of cash and access to 2 billion. We think it is highly unlikely, but we wanted to make sure our investors knew that we are planning for the worstcase. We are calculating what the worstcase is, then operating to make sure we are ready. We obtained a memo you sent to your employees are you said this is scary, but it is not a financial meltdown, that you are on solid financial footing, and your costs are variable and you can manage your business city by city day by day unlike any other company in the world. The coronavirus is new and a lot is not understood. , isd on what you have seen ridesharing safe, is food delivery safe . The right assuming steps are being taken, i do think it is safe. We are seeing in hong kong, taiwan, china that ridesharing is coming back. If people get back to work, then ridesharing is safe. The variable cost nature that we have makes our business quite resilient. On the other side, on food, we are seeing food in many countries where restaurants are not shutdown or you have Delivery Services going, food is holding in, and in some cases very strong. We have this incredible it just a goal places or bringing things to peoples homes, and more than ever it will be important to bring things to peoples homes. We think the food business is a great stream diversifier. We think rides are safe, and especially safe because we have the best Balance Sheet in the business. About the Public Health issue and customer scared to get in the car, drivers scared of driving passengers, would you put your kids in an uber now . Decisions that depend on the circumstance. You cannot have a global answer for that. I live in san francisco, and today i would not put my kids in an uber because the governor specifically asked for us to lock down. App,u look at the hooveuber is thisrancisco we ask a trip you really need to take . Not many businesses would say, are you sure you want to use this . We think our first responsibility is for everybody to step up and bend the curve, and we are doing the same. Uber that was the ceo of speaking to Bloomberg Technology and emily chang. Coming up, conflicting messages out of the white house. Malariat trump touts a drug and says the fda approves it, and minutes later the fda says it did not give approval for that drug. That is next. This is bloomberg. Normally the fda would take a long time to approve that, and it was approved quickly and is. Ow approved by prescription individual states will handle it. Doctors will handle it. It is going to be great. Matt u. S. President donald trump saying the use of a decadesold malaria drug had been approved for treatment in covid19 patients by the fda in the u. S. Minutes later the fda said the drug had not been approved for coronavirus treatment. , we are in aly search for drugs here. There are so many starts and stops. The consumer and investor does not know what to do. Thingthe interesting about the malaria drug, these drugs are used experimentally. Any doctor can use any drug they want whether or not it is approved for an indication that it might work. Thisnk the evidence around is relatively thin. It could be an interesting thing to see if it works. The who said a couple days ago experimentalduct treatments against each other. Gilead drug we have heard about used experimentally in china. Ands already on the market will be part of that test. Soony find out relatively whether any of these work at all. Is all we have time for. We appreciate you joining us briefly. We will continue to cover this story. Hopefully it is a quickly developing story. European equities are trading higher. This is bloomberg. Awesome internet. Its more than just fast. It keeps all your devices running smoothly. With builtin security that protects your kids. No matter what theyre up to. It protects your info. And gives you 24 7 peace of mind. That if its connected, its protected. Even that that petcamera thingy. [ whines ] can your internet do that . Xfinity xfi can because its. Simple, easy, awesome. [ barking ] wthats why xfinity hasu made taking your internetself. And tv with you a breeze. Really . Yup. You can transfer your Service Online in about a minute. You can do that . Yeah. And with twohour Service Appointment windows, its all on your schedule. Awesome. So while moving may still come with its share of headaches. No kidding. Were doing all we can to make moving simple, easy, awesome. Go to xfinity. Com moving to get started. Francine europe on lockdown. Italy overtakes china as the country with the most coronavirus deaths. President trump wants to speed up the approval of possible drug treatments, but officials warn trials could take a year. John hopkins says the global death toll has topped 10,000. And russia says it wont submit to socalled black male from blackmailocalled from saudi. Good afternoon and good evening, everyone. From london and new york, and francine lacqua, with taylor riggs. A lot of the focus is on that extraordinary action from the bank of england yesterday, supporting stocks, but now we get further lockdown in italy, and we look at this price war on oil and ask ourselves when it ends. Taylor what an extraordinary we get has been. It has been such a