Global coronavirus cases top 2 million. Germany is set to start loosening the lockdown for next week, and President Trump will unveil guidelines to reopen today. European futures turned positive despite historic declines in retail and factory gauges, sinking stocks on wall street. Attention turns to todays jobless claims. Plus, wti crude at an 18 year low amid a record collapse in the u. S. Fuel demand. Washington is considering paying drillers to leave oil in the ground. Just under an hour away from the start of cash trading. Nymex crude still under 20 a barrel, but rising today. We see futures doing the same, regardless of where you look. European futures are up half a percent. On dax a percent futures, quarter percent on ftse futures. Dow jones, s p, and nasdaq many contracts all showing a little bit just the slightest 10th of a percent of a game today. Anna . Anna lets talk about the breaking news from european corporates. The travel and leisure sector in focus when it comes to the impact of the coronavirus. First half have had before tax million e of 185 180 5 Million Pounds to 200 Million Pounds. They had loans totaling 400 Million Pounds. Airlines should not hemorrhage too much cash at this point. They say they have sufficient liquidity to endure the fleet grounding, and proceeds in the range of 400 million to 500 million are going to come from aircraft sales. This is a fascinating story. It is in the crosshairs of the early impact of coronavirus. We have seen the grounding of aircraft. We also saw the cancellation of an order with airbus, causing something of a rift between the founder and the rest of the board. The founder has been calling for a Shareholder Meeting because he doesnt have confidence in the ceo of in the cfo and others. Those are the latest numbers coming through. They are confident in their ability to last this out, to endure this. Lets get a first word news update for you now. The coronavirus is passed a grim milestone with global infections topping 2 million. It took four months for the virus to infect the first million. That number doubled in only 12 days. In u. K. , and esters are expected to extend the lockdown today. Officials say they are signs britain may soon be passed the pandemic. President trump will relax stayathome rules, will release guidelines to relax stayathome rules. However, it is not clear whether states will follow the federal move. Moon jaein has called a parliamentary election within south korea. The Ruling Democratic Party took 180 places in the 300seat national assembly, the largest parliamentary election victory in 30 years. The results are being seen as a show of support for moons handling of the coronavirus outbreak. E European Countries European Union countries have expanded their ban on selling stock within a month. France, spain, belgium, austria, and greece all say the untilition will continue may 18. Hedge funds are among those opposing the band. Global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. Matt . Both all right, anna, corporate results and Economic Data are highlighting the severe hit resulting from the economic shutdown designed to combat the spread of the coronavirus. U. S. Retail sales and factory output posted historic declines in march, and surveys for april look even worse. Earnings reports show the virus is taking its toll. Goldman sachs investment portfolio took a massive hit, while bank of america and citi followed rivals in setting aside billions for loan losses. Lets get into the markets with mark, our mliv managing editor. There is so much to talk about today from data to Bank Earnings to the strength of the dollar. I want to start their. Car filled reynolds on the blog says the strength of the dollar is adding to concerns that this strengthening riskoff move could develop such that we see fresh lows in this cycle. How much is that a concern . Mark i think if we do see sustained dollar constraints again, it is a concern. The dollar plays into financial conditions around the world. I take a slightly different in that in garfield dont think the dollar moves are wearing in the short term. The dollar has calmed down in recent weeks. Risees not mean they cant again and cause concerns. But to me, the dollar is a big risk at the moment. Mark. Good morning to you, interesting to see futures in europe and the u. S. Turning around a bit. Perhaps we extend the rally we have seen. Quite stunning, what we have seen the global s p and equities recoup after the selloff in march. I was wondering how much since this makes. I know you have been bearish, but i was reading analysis that bold and fively months before a recession comes to an end. To buy stocks in march or april, you have to believe it would come to an end in august or september. Is that sound premature . Mark i think it makes sense to buy stocks well before the recession ends. It is on average around five months, but there are a lot of variance in that. Sometimes it is 13 months before. What countsnt for as a correction or bearishness, you get a bigger sample size. You should be looking for stocks to bottom out before the economy turns around. I dont think thats a false premise, but it just assumes that the economy will be motoring on in august. At the moment, people are focused on these headline data prints. I dont think it matters how bad the data was yesterday or today. We are getting all these extreme statements like worse than the great depression. Bearsk the bulls and agree that the data shock will be extremely powerful. I think the disagreement is on how long that economic slowdown will last, and the other is what are the consequences in terms of employment and consumption, and how does the knock on consequences counteract government policy around the world . That is the bigger issue. I am not too worried in the shortterm. I think the rallies we have seen in the last couple of weeks can go higher. I think we still have material downside in the month ahead months ahead, because i think the economic damage is sustained for quite a few months, and the knock on consequences will last many months. I dont see us coming out of a recession by august. Matt i take your point on the data. Its not like anyone expected, after shutting down every store, pub, and restaurant in the world, that we are going to have great retail figures. Also, money is very cheap. And animal spirits will conquer all. When do you think those are going to come back . Neil mark we have seen massive animal spirits already. Fueled a belief that the market can turn around and we should not get too caught up on the temporary economic damage. There is certainly a lot of valid arguments for why people should be buying the market. I personally think they are outweighed by the bearish arguments, but i dont think the bullish arguments dont make sense. The bullisht of theory, it sometimes sounds like it is being phrased a certain way, but its not, the main part is there is so much liquidity in the system, so much money in the system, politicians around the world have made it clear they have your back if you buy risk assets, and they will keep pumping more in until we get to this side of the virus. Why wouldnt you buy . You are going to keep getting more money, and therefore the economics dont matter again until policymakers step back. I think thats why we are getting animal spirits in the market. Is that enough to sustain us for the next few months . Im not sure. Anna we will see how long that approach lasts. Mark, thank you very much. Remember, you can join in the debate on todays question of the day, get involved if you want to get in touch with the bloomberg tv team or the markets bloomberg. N your coming up, amid the turmoil of the coronavirus pandemic, some investors are seeing opportunity. Is looking toks start the largest distressed debt fund. He sees opportunity, and so do some others. Back. Welcome we are just over 45 minutes away from the start of cash Equities Trading, and we are looking at interest pointing up. We had bigger than 3 losses across indices in europe yesterday, so we have to play catch up to the u. S. , which only lost 1 and change. We see u. S. Futures pointing higher as well, so watch out for the possibility of a risk on open this morning. Amid the turmoil of the coronavirus pandemic, some investors are seeing opportunity. Howard markss Oaktree Capital startking 15 billion to the largest ever distressed debt fund. It will aim to profit from companies damaged by the crisis. Thats what distressed debt funds do. In some cases, it may seek control of businesses in restructuring. Joining us is the head of private Capital Markets at ubs. We were just talking with mark cudmore from the mliv blog. Is this in the spirit of the entire private Equity Industry right now . Do you see assets out there that you believe are undervalued . Isabella its hard to say if they are undervalued at this point. I think what you see, there is ,oing to be ratcheting levels just in the same way you have seen Public Markets correct, we expect corrections in private markets. At this point, we have seen more investors focusing on their own portfolio of companies and working with them. Aroundom in Institutional Investors working with companies, i a lot of them are trying to focus on their needs. You see the shift going from cash consumption and growth. So, cash reservation is the focus. What about smaller businesses that you deal with or your investors deal with, unicorns and the like . How are they managing to ride out this current storm . Isabelle i think all of them are focusing on trying to build plans for 20 down, 40 down, 60 down. It will change if you just have cash on Balance Sheet versus having a weak Balance Sheet. It depends on how deep the pockets of your investors are. I think also, on a positive note, it is very important to know how quickly these companies adapt. A lot of them are shifting Business Plans to adapt to the current situation. That agility is what we need in the current environment. See consolidation per sector in any way. I think you will see winners coming up. The market was somehow, prior to this crisis, waiting for a correction, so we are seeing that correction right now, and i think you will see a winner coming out with some sectors benefiting and others suffering that that themselves that need to reinvent themselves. Matt which sectors do you see benefiting . Isabelle i knew i was queuing you up for that question. Anything around health care. That one thing to note is that with this crisis, i think that one thing to note is that with this crisis, everyone is working from home. Are seeing an increase in production of digital tools, a clear benefit for a lot of companies. Business, wellbeing, mental health, there is demand already from that sector. Educational sector. Everything around remote working. Online gaming actually is one of the sectors we have seen increasing a lot in terms of demand. Utomation of production i thicket is going to continue growing. Since x remains strong with payments and trading. All these sectors are benefiting from the fact that we are all at home. Anna i think matt and i collectively can vouch for the popularity of ecommerce, education technology, and gaming. Let me ask you, isabelle, you mentioned shoring up balance, cash preservation. Car companies wholeheartedly embracing assistance that is available from governments, or are they hesitating to do so . What is your experience there . Isabelle i think it is a mix, and i think it depends on your situation. I think companies are trying to manage and others are having support. I think it is a mix, to be honest. There is no onesizefitsall. But we chose support around the ecosystem. In general, in the current environment, the Product Market would pay a big low play a big role in the postcrisis environment, but we have seen the Public Market down 70 in europe year on year at this point. As the markets reopen, expect the private markets will be good there. Isabelle,t thanks for joining us, head of private Capital Markets at ubs. Coming up, we will hear why it is important to protect Vulnerable Companies from hostile takeovers during the coronavirus downturn. Thats next. Anna welcome back. Futures suggest they could be hired at the start of the training day. Asiane seen a wobble in stocks driven by concerns around u. S. Growth, but now things are different in the futures. Bethsaida says it is important to protect companies from hostile takeovers during the coronavirus downturn. She gave bloomberg an exclusive interview. Margrethe it depends a lot on how long this will take. The first wave of measures was liquidity, enormous amounts being made available. It may be so that later, recapitalization may be needed. We are consulting on common european framework, if needed, in order to make sure its Member States will want to recapitalize ininesses, that it is done the same way, that we maintain a level playing field, that we try to limit the distortion of competition. While we have had quite a positive response to that from Member States, it will take some days before we are ready to launch it. You turned a few heads a few days ago in which you advocated taking stakes in companies to prevent china from taking over those companies. Is that how you feel two days later, commissioner . Margrethe i think it is important that we are vigilant, because we have come into this Health Crisis in different points in time. We are suffering from it to a different degree in every point in time because things develop. Some countries open, some countries are still deep in the crisis and people are really suffering. That also means that in the economic recovery, some will be stronger before others have they recovered, and that risk that businesses may be vulnerable for a hostile takeover. I think it is important to not be naive in these days, because a number of sectors are strategic. A number of sectors are indeed needed. I think it is important for businesses to know that the states can step in if they want to, but also for the potential people who want to do a hostile takeover, that we will use the tools that we have available. Kind of picking up on that, you have in place at the moment a temporary framework that is allowing greater flex ibility to protect businesses affected by the virus, to protect businesses subject to such a takeover. I am wondering how long you see that temporary framework being in place, and when the temporary element ends, whether or not you see changes to the longterm framework when it comes to competition within europe. Well, first and foremost, we have already changed the temporary framework aid too enable more coronavirus research, production, to make sure that businesses have changed their production into protective gear, that they can get a new loan guarantee. Now it is changed to enable recapitalization to limit distortion of competition. But the entire framework is set to be in place until the end of the year, but we will evaluate when we get to the summer if it needs to be prolonged. At the same time, we are in the process of looking into all our rules and guidelines in order to make sure they get the service, because it is still a digital economy, an economy where autumn is asian, Technology Automation and technology are changing how we do business models. That, i think, will be as relevant on the others of the koran a crisis as it was before. The other side of the corona crisis as it was before. Matt that was margrethe vestager. Coming up, global cases topping 2 million, but in the u. S. , trump says infections have passed the peak. More on the president s plan to reopen the economy. Beyond the routine checkups. Beyond the notsoroutine cases. Comcast business is helping doctors provide care in whole new ways. All working with a new generation of technologies powered by our gigspeed network. Because beyond technology. There is human ingenuity. Every day, comcast business is helping businesses go beyond the expected. To do the extraordinary. Take your business beyond. Anna getting breaking news coming through from a newspaper in japan, talking about how Prime Minister shinzo abe is going to declare a nationwide state of emergency. What previously had not been nationwide will now be nationwide. The state of emergency will last until the sixth of may and apply to tokyo and six other prefectures which border the capital. Let me tell you what you need to watch out for today, 30 minutes away from the start of the cash equity trading day. Here are key events we are watching out for. U. S. Data and Bank Earnings yesterday. Today, finance ministers from around europe discuss the impact of the coronavirus pandemic, coming after thursdays meeting when at 10 00 a. M. , we get euro area production data for february. Bloomberg economics forecast a decline. This should be the calm before the storm, though. Later today, Morgan Stanley wraps up a rough week of u. S. Bank earnings. Investors will be watching for more loan off provisions. Matt . Matt lets get you the bloomberg first word news. Todays top stories out the terminal, the coronavirus has passed a grim milestone with global infections topping 2 million, that we know about. Four months to infect the first million. That number doubled in only 12 days. In the u. K. , officials are expected to extend the lockdown today, saying there are britain may soon be passed worst of the pandemic. President moon jaeins Ruling Coalition has scored a big election victory in south korea. The Ruling Democratic Party and its Satellite Group took 180 places in the we hundred 80seek national simile in the 380seek national assembly. 80seat national assembly. It is seen as a show of support for moons handling of the outbreak. Five European Union countries have expanded their ban on the shortselling of stocks for the month. France, spain, belgium, austria, and greece say the prohibition will continue until the 18th of may. Hedge funds in germanys primary exchange are among those opposed to the man. To the ban. Global news powered by more than 2700 journalists and analysts in more than 120 countries. Anna . Anna lets talk about whats going on stateside in terms of coronavirus. Global cases of coronavirus have reached 2 million, and in the u. S. , donald trump will unveil guidelines to ease stayathome rules. The president says the virus is showing signs of plateauing in some regions in the u. S. He later held a marathon series of calls with dozens of Business Leaders to get their perspective. At the Daily White House virus briefing, trump said reopening guidelines would be announced today after he speaks to governors. Pres. Trump the battle continues but the data suggests that nationwide we have passed the peak on new cases. Hopefully that will continue and we will continue to make great progress. Anna joining us from new york is Annmarie Hordern with a look at what President Trump is expected to announce later. He has been talking for some time about reopening the economy. He wanted to do it by easter. That has been pushed, of course. He is consulting with the Business Community about the best way to reopen. What are we expecting to hear today . Annmarie today he will release guidelines about loosening these stayathome measures. You just heard him talking about the fact that he sees we are past the peak of new cases. The question is, is there potentially a light at the end of the tunnel . The Economic Situation in the United States is quite grim. Yesterday we had a decline in retail sales and factory orders, and today we will get jobless claims, which have been devastating. More than one and 16 americans have lost their jobs, and today will show another five and a half added to that. Upsee the eagerness to open the economy, but the Health Care Community does not entirely degree. The director of Johns Hopkins says we are not out of the woods yet. The finance Community Says to the president that we need more testing before people can come back to work and feel safe before coming back to work. If the Trump Administration has a situation where they want to reopen the american economy, would americans actually follow suit . Get to the drilling story. Apparently the u. S. Is considering paying drillers to not pull oil out of the ground. What are the details . Annmarie the u. S. Oil story is flipping itself on the head. First we have a u. S. President pushing for higher oil prices. Now they are looking at a plan to potentially pay drillers to keep oil in the ground. The department of energy is looking at companies sitting on 300 62 5 Million Barrels of oil. This plan would make the untapped crude part of the u. S. Millionnt 365 barrels of oil. This plan would make untapped crude part of the u. S. Government, but there is a catch. This plan would cost at least 7 billion. Democrats have already said any money going to the oil industry, they dont want it to be seen as a u. S. Bailout of big oil. If they want to go ahead with it, there was going to be a fierce political fighting d. C. Nnmarie, thanks. Annmarie hordern out of new york talking to us about the Trump Administration attempts to open and reopen the economy, as well as attempts to put a floor under the price of oil. Coming up, banks take a hit as the coronavirus pandemic fx First Quarter revenue, but it seems traders are saving profit and may be their own jobs during this crisis. We will take a look at whats going on with the controversial bankers. Anna european futures suggested to be stronger by the start of the trading day. A bounce expected in london, paris, and berlin, so look out for that. U. S. Futures also point higher, not by quite as much. Let me tell you what we are hearing from the g20 right now. He spoke with saudi arabias finance minister earlier about the g20s historic agreements to help the run a virus pandemic help fight the coronavirus pandemic. We have seen swift actions by the g20 in coordination with the imf and the world bank. It is unprecedented. The g20 alone has put forth north of 7 trillion u. S. Dollars so far into the Global Economy. That means they are able to economyrom and move the of other countries at the same time. Two, the imf support package approved today ensures that sufficient liquidity is economiesto emerging in addition to the front lines that are available to the central bank packages they have already announced. You were talking about this remarkable move by the g20 earlier today. Something more specific. An important part of this was to suspend payments. Do you anticipate a longerterm restructuring of some of the debt of some of these countries . Of course. The idea is while we selection reselctioning may take time for a Bilateral Agreement to be put in place, we want to make sure we dont waste time. Ae g20 has committed to swift, strong, and significant actions immediately. It will give poor countries room to consider rescheduling relief from some of the debt throughout the next three to six months that we think will be needed to ensure that we close that chapter. We have a question from a bloomberg viewer that i would like to ask you. The viewer asks, is it possible that this crisis might be an opportunity to consider further opening of the saudi Capital Markets to foreign capital . Is that on the table . Absolutely. Saudi Capital Markets have been relaxed over the last three years. Significant investment from International Investors. Yes, absolutely, we will do whatever it takes to ensure that we have access to International Investors in todays saudi markets. I finally, mr. Minister, cant talk to a saudi arabia an official without talking about oil. Obviously it is having a tough time. We have a global agreement to curtail production. You think more is going to need to be done to get some floor under oil . That is affecting the Global Economy almost as much as the coronavirus at the moment. I think is significant agreement has been reached not only from the opec and opecplus agreement, but also by producinging from companies outside opecplus signifies the world we need to ensure markets are balanced, as we have been doing for decades. The fact that the g20 Energy Ministers had an extraordinary , weing a couple days back welcome that agreement and are committed to ensuring that market stability is key to face covid19. We will continue considering whether action is needed to ensure market balance is there. , the world is impacted and a lot of sectors, and we are watching the sectors that are most impacted, designing the solutions that fit with the relevant sector. That was the Saudi Arabian finance minister talking with our own david westin. Wall street trading desks have notched their best quarter in eight years. In this volatile period for stocks on record. That helps the industrys largest firms remain profitable, even as they set aside more for bad loans in the First Quarter than they did for all of 2019. Joining us is tim. This is fascinating because these are the trading desks that took such a huge hit during the great financial crisis. These are the trading desks that worried congress so much, they created doddfrank. These are the trading desks that were kind of the bane of the american peoples recession last time, and now they are the big winners. Tim good morning, matt. Can you hear me ok . Matt i can, yes. Tim you are absolutely right. Of course, we are at the very beginning, still, of this downturn. I think it is worth bearing in mind that these Great Results will have very high trading activity, when you are at investment banking, while at the same time we just started taking the positions on the path of that side of the business that are going to be required in order to fund the bad loans that are going to sour over the course of the rest of this year. That is similar to what we saw in the great financial crisis. Over the next couple of quarters, the big question is going to be how much trading slows down and how much bad debts go up. Anna good morning, tim. Let me ask you about the role that trade can play in offsetting the negative from main street usa in the way that bad debt will be racking up over future months. How much can trading desks take the edge off that, compensate for that . Is it just a small percent . Tim anna, good morning. We have seen trading activity fixed income up over 132 sorry, we are seeing numbers up 30 to 40 so far in income across the banks and 20 to 40 so far in equity trading. But first [inaudible] will be responsible for generating those. It is their clients that are generating it as they reallocate Asset Classes in their portfolios. Is the natural reaction to the huge changes in market values. Saw in the crisis, once everyone initially changed their position, now is the reality of this sets in, those trading volumes should dive back down. It is something we expect to continue. Just so we are clear, the big banks that have reported so far, goldman, jpm my bank of i, those four banks together had revenue of almost 23 billion in trading in just the First Quarter. Trading said, they are their clients money. As far as their own investments, Goldman Sachs took an almost 900 million hit on its debt and stock portfolio. That contributed to a 46 incline in profit. It is a scary figure. Tillman says it is going to move away from trading its own funds goldman says it is going to move away from trading its own funds. Are there other banks, tim, that are holding this much . No. The short answer is Morgan Stanley will have some of that. I think what i would bear in mind is that the timing of the, from ae many tragedies financial and accounting point of view, i am talking about these banks quarters. Among one of the worst times to have to mark your book to market. What has happened since then is global Central Banks have stepped into tried to calm volatility in the markets, as we have seen it rebound with some of the asset values involved in those trading books. But we expect similar losses to be permanent from goldman, i braggingcareful before just how much they matter. Anna tim, thanks very much. Staying with us, tim morgan, financial specialist at kbw. We are minutes away from the European Equity open. Futures dewpoint higher by 1. 3 . Expecting a solid bounce. But with washingtons biggest banks, we will look at the winners and losers next. Anna welcome back. We are minutes away from the start of the European Equity trading day. Futures point higher. Thats get an update on your new stories. Ray dalio says investors would be crazy to hold government bonds because of money printed by Central Banks to rescue the Global Economy. The founder of the Worlds Largest had fun says the fed has no choice but to spend trillions of dollars Largest Hedge Fund says the fed has no choice but to spend trillions of dollars. His fund found itself on the plunging side last month. Are getting a very important breaking headline in germany. The country is going to provide 30 billion euros in backstops for credit insurers. These are Companies Like i lianz that sell. Nsurance to pay merchant they are going to build a receivable if clients cant pay. For example, when you go into lockdown and all of a sudden your clients cannot pay you for the stuff you gave them, you need that money to get cash flow going. Germany is going to provide 30 billion euros of backstops for credit insurers to keep that money flow going, and thats going to be a fascinating thing to talk about with oliver beto, when we talk to him in just a little bit. S get back to tim morgan lets get back to tim morgan. Tim, as we have gone through this First Quarter earnings for most of the biggest banks, what do you expect in the Second Quarter and throughout the rest of the year . So many people have said you are going to get horrible numbers for this quarter. The retail, factory numbers we are seeing, worst ever, but of course, because we shut down the entire economy. But what is the recovery going to look like . Tim that is the magic question. I wish i had the magic answer. The scariest thing you heard from the banks is that j. P. Morgan said while they had initially forecast gdp growth as 25 and for unemployment to go over 10 at the end of the quarter, the economists are going to a 40 drop in gdp and perhaps 20 unemployment. Everybody is playing with the numbers and scenarios, hundreds of scenarios. Is obvious ultimate answer that the Second Quarter is going to be terrible for these banks in terms of credit. And depending on how market values go, we may or may not see trade posted in the First Quarter. Where wed quarter is are expecting to see the worst numbers as activity levels will have slowed down to incredible levels. We will get a true sense of how many consumers and businesses have been unable to make payments against debt, and the banks will be making probably decisiont difficult for how many loans they need to consider to go bad. Hopefully as all the countries around the world began to look at coming out of the lockdowns , weer later in q2 or in q3 will begin to see some ideas about whether it is a vshaped or an lshaped recovery. Our forecast is to look at something more like an l. We think there will be a lot of changes from what has happened in this crisis and it will take a long time to work into the system things like global travel, tourism will probably stay low for quite some time. Matt ive got to stop you there. Tim morgan, thanks so much for joining us. Minute until the start of cash Equities Trading in europe. Here are your headlines. Global coronavirus cases top two million. Germany is set to start reducing lockdowns next week, and presentt trump will guidelines to reopen the economy later today. Futures are positive despite sinkingally low figures numbers on wall street. Wti crude is set to hit a 18 year low. Bloomberg learns washington is considering paying drillers to leave oil in the ground. To quicklyt reiterate a headline we got across the terminal, very important for german businesses, especially those credit insurers like allianz. Germany will provide a 30 billion euro backstop for credit insurers, and we will speak to the ceo of allianz can just about 30 minutes. The markets are open this morning. We did have futures rising. It looks like we are set for a riskon slightly, at least, riskon open. Global macro movers. 1. 6 , theex up netherlands up 1. 5 . Euro stoxx 50, the bluechip index across the continent, up 1. 4 . Ftse trading up a little less than 1 . Pretty much everything that has opened, that does not include the dax or ftse mib which remain closed right now, is trading higher. We can expect those equity indexes to trade higher, the ftse mib up 1. 7 . The dax will surely get a boost by this headline. It wasnt entirely unexpected, that germany will backstop 30 billion euros of losses for credit insurers, so that is good news in order to keep the oil moving through the economic engine as it were. that supply chain insurance really important when it comes to destructions in supply chains, but also dislocations in demand we are seeing globally. European markets opening higher, as you said. Big losses yesterday, but today is another day. We are up 1. 3 on the stoxx 50. Italy reported its fewest new infections in 4. 5 weeks, so very positive news coming out of italy. German chancellor Angela Merkel said she would allow some smaller shops to reopen next week, and went as far as to set out when certain parts of the economy would be closed, including restaurants, bars, gyms. Of fixeds, the head income in terms of risk assets, your focus is on fixed income, but you have eyes on both. We saw a plummet in march and a real rebound in april. In your universe, how is the rebalancing going . How are you seeing the assets you follow perform . Everyone. Rning, are inn fixed income, we high yield, emergingmarket, and Investment Grade corporates. Support fories markets and economies is certainly helping highgrade issuers. Weve been cautiously getting back into Investment Grade corporates as a result. Riskiercomes to the end, highyield corporate and some emergingmarket sovereigns, we are still taking a very cautious approach. We see sovereignty risks, defaul ts, downgrades, etc. So were not getting into the riskier end of the fixed income market just yet. But as we work through the economic dip they will offer opportunities, but we arent there just yet. Matt so you dont think weve really had the bottom yet is what you are saying, right . Paul its one of those difficult situations, where the overall market may have reached a bottom in terms of pricing, as there will be naturally, you have a big hit to cash flow, a lot of concerns for companies, the winners and losers are difficult to assign. Adds,her than wholesale we pick and choose gradually, to make sure the companies we invest in in highyield are the ones that can survive. Be casualties, some defaults. Anna indeed. Some companies will not be safe. I wonder which parts of the capital structure are safe. Credit investors will feel more comfortable than Equity Investors in that situation, but what are your expectations around how companies can weather this storm, with help from Central Banks . Have we seen all coming through, or is there going to be more of it . If Central Banks are buying corporate debt, then thats what we should do as an investor as well . Call i think thats a good paul i think thats a good broad approach. As i mentioned, the Central Banks able to keep everything up and running. What were looking for in is companies and sovereigns who can do without further financing, who have good fallback arrangements. Sectors thated to will be much lower to come out of this dip than others, would be travel, restaurants, retailing, etc. Even the oil sector. There will be sectors that will need lifelines for much longer, as we go back to work. So i think its countryspecific, sovereignspecific as well. Its true if the Central Banks are buying the market, you should get involved. Necessarilythink seeingld curves were compensate you for the potential default risk. You call, paul, we keep with us. More to come from paul brain, head of fixed income at newton. We would also talk about ray dalio, who says it would be crazy to own bonds right now. We well hear more about why from him. Bloomberg. Is is anna welcome back to the european open. Decent day of gains for the european equities this morning. Very decent gains on the ftse mib, up 1. 8 on italian stocks. Lets get a business flash morning. R your this u. S. President trump is considering paying drillers not to drill oil, compensating companies sitting on as much as 350 Million Barrels of oil reserves. West texas crude futures settled below 20 a barrel yesterday for the first time in 18 years. Reportedmiconductor demand for advanced silicon remains steady, thunderstorm resilient underscoring resilient demand in data centers. The data comes despite warnings from tsmcs top consumer, apple, of a slow and lower demand in china. Has banned france in shipping of nonessential goods from amazon. Amazon has been given 24 hours to comply and upgrade security. Your Bloomberg Business flash. Matt ray dalio of Bridgewater Associates says it would be crazy to hold bonds right now. He spoke with Erik Schatzker during a bloomberg invest event. Lets listen. Like the 1930 to 1945 period, period inperio which i think you would be pretty crazy to own bonds. Is a promise to receive currency, and isnt it pretty clear they are going to make a lot of currency . So i think that changes the appeal of bonds. Why in the world would you hold bonds . And that has a big effect. So when you start to think about how much wealth is in bonds, and where is that wealth going to go, and how is that going to work, and how are they going to control it . Thoughts about that. So what is a good storehold of wealth, and how will that play out . That will be an important consideration. And that has to do with storehold of wealth. I think, what are the stable theeholds of wealth, in form of stocks and other kinds of debt . I want those that have strong Balance Sheets, stable incomes and so on, so youre basically having those assets that will perform well in any kind of environment, and i look at them based on how cheap or expensive they are. When i think of the world, i divide the world into different locations. This picturehink is very much like the 1980s and flooding withere they are not getting to a number of emerging countries. When i look at the distribution of wealth in terms of their Balance Sheets, like every individual i look at what is there income, their expenses and their savings, and when we go through that exercise, i think it changes. I dont want to be in places that dont have good ones. Then, i look at civil behavior. How are people with each other . Is there going to be a fight . And will that fight, will people be orderly, will they work it out, and what will be the changes in taxation . Will corporate taxes come back in certain ways . What will the changes because we arent going to deal with that equally. So im looking at all of that to create a picture of differentiation. I see a very differentiated world, and when we talk about the economy coming back, i think you have to realize what big changes are behind that, that cannot be changed. Lets say for example selfsufficiency. I thnk we are think we are going to produce different things, and we will be selfsufficient. We were operating in a world where we were globally connected and whoever was most efficient would get it, and wed go get it where it was most efficiently produced. That world wont happen again, so youre going to come to a world where we originate, produce at home, and you start to think, what do you need . I imagine we will be rebuilding our basics. Health care systems. How much savings are going to put into rebuilding some of like basics of hospitals, fragmented politicians or political structure in italy forcing the limit. Thanks very much for joining us. Thats the thoughts on the markets this morning. Lets talk about whats going on across europe. Germany announces plans to start returning to normal. It mapped out with detail what will be happening when starting from next month. Thats not the same story across europe. We will bring you the details of what is happening across europe, next. Bloombergme back to markets, european open. Right now we are 24 minutes into the trading day and see equity indexes climb back from the 3 losses we posted yesterday. 10,375. 5625. You can use the wb function, for example on the bloomberg terminal, if you want to see the 10year yield, just under 64 basis points. In germany, looking at 45 basis points and in the u. K. Gilts yielding positive 30 basis points right now. Anna lets get uptodate with how europe is tackling the coronavirus and the progress being made. Countries across europe are planning for the end of the lockdown. Angela merkel said she would allow some form of shops to reopen next week with schools restarting gradually from early in the month of may. The u. K. Is expected to extend the lockdown today but Officials Say that the virus is probably reaching its peak. Joining us is maria tadeo. Good to see you. Looks like a divergent picture across europe, but i guess you would expect that. Some went into the crisis earlier than others. Exactly. Starting to emerge as a timeline, early may a return to work to some extent. But really the question at this country it will depend on medical capabilities and supplies and whether or not your hospitals are ready for potentially round two of the virus. We see good intentions in future coordination but in real life the practical questions will depend on how ready countries are. We have seen a lot of digest divergence on this. In italy cases are dropping to a fourweek low. Is the pressure growing to open up faster there . Yes. And when you look at the italian situation, you have companies and lobbies and regions affected now telling the government that we need a plan to come out of this. ,e need to reopen the economy because the data we are going to see in the next few weeks is not going to be good, but i would say at this point italy is, two very difficult decisions coming up, what to do with the esm and went to reopen. Matt thanks very much. Maria tadeo talking to us about the state of play now. Coming up, we speak to the ceo of allianz. That exclusive interview after we saw germany will backstop credit losses. This is bloomberg. Matt welcome back to bloomberg markets, european open. 30 minutes into the trading day, looking at gains across equity indexes. If you want to take a look at broaderx 600, the european benchmark index, you can see gains there as well, coming back from a dip earlier in the session, off a little over 1 . In terms of the breakdown, in terms of the sector breakdown, you can type grr on bloomberg for any index and see the breakdown there. Right now, we have travel and leisure stocks rising, as well as technology and bank shares on the up. Now, lets get the bloomberg first word news for you, top stories from the bloomberg terminal. The coronavirus has passed a grim milestone with global infections topping two million. It took about four months for the virus to infect the first one million confirmed cases and then that number doubled in only 12 days. U. K. Ministers expected to extend the nationwide lockdown as there are signs madrid could soon be past the worst of the epidemic. President trump said he will unveil guidelines to relax estate at home guidelines later today. Citing signs the coronavirus pandemic is plateauing, the president plans to issue guidelines on reopening the country. However, it is not clear if states will follow the federal mandate. The president is also considering paying u. S. Producers to stop pumping oil, to alleviate the glut that has destroyed prices. Bloomberg understands the Energy Department drafted a plan to compensate companies for sitting on as much as 36 5 Million Barrels of oil reserves. West texas crude futures settled below 20 bill yesterday for the First Time Since 2002. Israels rival leaders have failed to reach powersharing d eal by the midnight deadline, making a fourth election in a little over a year increasingly likely. The Prime Minister Benjamin Netanyahu and Opposition Leader benny gantz matt oliver, matt miller here in sunny berlin. Wouldnt you be able to do that even without this . Dont you have the resources . Of default soe big that allianz needs the government to backstop losses . Absolutely, we dont need that. It is very important to understand that the way the credit industry works has, the credit risk industry works, is allowing us to manage risks the way we want, particularly allianz. We are stable, and can absorb losses. The problem, with Capital Markets over the last few weeks, people behave in a very cyclical way. Credit,suring trade tradeeople will further and i could lead to insolvencies we cannot cover. Unfortunately, one outcome of the Industry Business model, and weve had learning from the 2008 and 2009 crisis. There needs to be a Publicprivate Partnership to make this happen. It is not a protection of our Balance Sheet, because we dont need the protection. What we are doing is extending lights of lines of credit we would normally not hold. Makes sure any decisions that are made around trade financing dont make things worse than they already are. The insurance sector need support further than this . Is there an area of the Insurance Industry or perhaps another bureaucracy where you would like to see something similar to whats happening in germany . Oliver i personally believe we solutionually need a like this on the european level. The french government enacted something, but far more limited, and there are areas we will talk about when we are through with the coronavirus shortterm impact. Because this is such a massive, earthquakelike, again i would compare it to a meteoroid impact. There are certain covers, like terrorism, or a Nuclear Power plant blowing up, that cannot be insured with normal policy wordings, but through a Publicprivate Partnership. And i think going forward, we need to look across sectors and exposures to say, how can we make sure we cover better than we did, when you have a systematic effect . Remember, Systemic Risk is not something the Insurance Industry can insure. We rely on diversification over time and in the portfolio. Just imagine we would not have one in every 10 cars having an accident every year, but everybody having an accident, motor assurance would become unaffordable. So we need diverse vacation, and corona or diversification, and corona or any largescale event does not have diversification, so the industry model cannot really work. We do not have is a Company Large exposure, i dont know about any others. If the contract laws are upheld. Now, the industry in my personal opinion, the effects are going to be massive. Theres a lot of debate. I can tell you across sectors, health care, business interruption, travel, media and entertainment coverages, they will be huge losses for the industry coming. It just takes a while for those to materialize. 2020 will not be a record earnings year for insurers. Be a do you expect 2021 to serious bounceback, oliver . Do you expect for the Insurance Industry, the Financial Recovery to ba vshaped . Oliver it is a very good question. I am not so sure. Together with our economists, we really believe more in a ushaped recovery. I think it will take longer for us to reignite the economy than is currently being foreseen. Theres a lot of things that have to be put in place. They will be a significant numbers of insolvency coming regardless, and we have to deal with that. There will be sectors, particularly around transportation, travel, hospitality, affected for a longer time. I cannot imagine we are going back to patterns any time soon that we have seen before the crisis, because we need to protect ourselves against a second wave of coronavirus infections. So in our opinion, the recovery will take a little longer, and we have as allianz prepared for that extremely carefully. Matt i just want to quickly ask. Back in february, you said reach hopesto to reach 12 billion euros of operating profit this year. Is that still the case, or is that forecast off the table now . Oliver so we are currently preparing our numbers for the q1 release, which will take place in the second week of may. Announcement, we will give an update on our outlook for the year. Actuallys are benefiting from the crisis. Were doing very well for example with our colleagues at pimco. On the other hand, in equities theres a lot of hedging. So we are doing a very careful analysis, and again with q1 results we will provide an update. Re always with allianz, we trying to manage through shortterm volatility and look for the longer run stability. Thats very important. Allianz is extremely strong in terms of sovereignty, extremely strong in terms of cash, and so we have been able to tell our investors we will pay dividends outside the agm on may 6. Anna oliver, thank you. Stay with us. We would like to talk about some things a little further. Allianz,ete, ceo of spending time with us this morning. A quick lin e on the bloomberg, we hear a barclays activist will withhold vote on the ceos appointment. No surprise given that we know he has not been in favor of the ceo of late. Well get back to oliver baate baete next. This is bloomberg. Matt welcome back to bloomberg markets. This is the european open. Im matt miller in berlin. ,e are talking to oliver baete ceo of allianz. As we saw u. S. Bank earnings yesterday, trading results were tremendously good, but those banks who had good big portfolios, especially Goldman Sachs, suffered big losses through the downturn. I wonder how your portfolio has been. I believe you have a total of 755 billion euros in assets you manage. How did they do . Oliver i think we are overall fine. We have, how do i say it properly, because whenever we Say Something about our assets we tend to move markets, so i have to be careful. We have protected our equities portfolio very early on. We have in the fall already instituted very strong downward protection on our equity portfolios, so knock on wood, weve done fairly well. Those wish we had some of gains we used to have, but we have not incurred significant losses, and i think thats a testimony to our investment colleagues but also to our strong Asset Management companies, pimco and allianz global investors. They have done a nice job in really volatile times. Things are crazy. Ive never seen anything like it, and i am already 55 years old. It has been remarkable. But after 2009 and after 2011, we decided we need to make sure that in all circumstances we can protect our Balance Sheet, and that turned out to be a very wise decision. Anna ok. So theres been a focus on protecting the Balance Sheet. I want to ask about dividends. You mentioned you would reassure investors you would pay them, but i wonder why you came to that conclusion and what the dividend would look like in the future. Because as you said, this is something that will hit the Insurance Industry like a meteoroid. This would will be drastic, largescale. How much confidence do you have in those dividends in the future . Oliver the first thing is, we have a very diversified portfolio, across life insurance, property, casualty insurance, Asset Management. As we have seen in the past, it has nicely diversified our earnings. Secondly, we have a very Strong Capital position, one of the few companies in the world that has a doublea rating. We haveapital position, been very capitalprotecting and that allows us to pay a dividend. Allianz, we are promising investors under anything we can do, we never want to reduce the dividend below what we paid last time, and we hold to our promises. Therequickly, i wonder if will be a lot of demand for pandemic insurance now . Oliver yes. This is really interesting. Going back to the past, a number withars ago we discussed corporate customers, retail customers, do you want or need pandemic insurance . The demand was zero, so most of the exposures we see today are driven by rather less disciplined underlining rather than consciously underwriting rather than consciously covering. Personally, i believe looking forward we need to look at pandemic risk and say how much of the risk is really insurable . A lot of it isnt. Second, is the insurer part of it . We have clearly contained risk exposures. Going back to an earlier comment, for a large event, when you have governmentinduced business closures, we need a Publicprivate Partnership solution. Forexample, the french large exposures, they have a state reinsurance company. Whatrmany, we think about happens when you have an atomic power station blowing up, and we need similar structures to cover pandemic insurance. Matt oliver, great to spend time with you today. Thanks so much for joining us. We will let you stay safe and sound in munich. Allianz. Ete, ceo of coming up, the coronavirus lockdowns Chilling Effect on the u. K. Economy laid bare today, with data showing retail growth falling to the lowest level since recordkeeping began. The leader of the report says the worst is yet to come. We speak to her next. This is bloomberg . Welcome back to the European Market open. 55 minutes into the european trading day, which is positive. Fell atail sales growth the fastest rate in march since records began. According to the british retail consortium, retail sales fell 27 in the two weeks following the stay at home order ordering closure of all shop steamed nonessential. Rc are joined by the b ceo. Helen, very good to speak with you. The impact on retail will be divergent. Some retailers have been doing very well, some very badly. Your concern must be for nonessential retailers. How sure are you we will see large areas of concern to you we will see large areas of u. K. Retailers go to the wall as a result of the coronavirus . Helen well, i think it all depends on how, the Government Schemes that have already been announced or are coming down the track actually have serious impact. Scheme, the Job Retention scheme in the u. K. Has been really welcomed by all retailers the retailers who perhaps have had to curtail operations, close stores or have seen their online sales decline. Whereas what weve also got is liquidity, cash flow problems, because when you havent got income coming in, there are still bills to pay, and the s chemes most relevant there are still not in place, so that money isnt flowing through into retail businesses. Playthink it is all to for, the answer to your question. Anna and no doubt you are looking to clues as how the lockdown will be eased in the u. K. , just as everyone else is. The government has been asked time and time again, what is the openinga process going to look like . Are you involved . Are people from retail involved in those conversations, about this approach . Helen yes, we are. We are in regular contact with government. Started if you like when you mentioned earlier from the Food Industry point of view, the Unprecedented Demand we saw ofticularly a huge amount engagement and lots of work with government to facilitate more food to get into our supply chains and markets and convenience stores. By doing some really serious stuff, like changing curfew requirements so more deliveries could be made. That engagement has continued into looking at the n onessential parts of retail and the support it needs. But as i said earlier, theres more to come. And starting to have those conversations about what the reachout might look like. I think everybody recognizes the safety of both customers and employees is going to be absolutely paramount, and were probably going to end up in some sort of phased process, so not a big bang. There will be different types of operations that gear up more slowly. But certainly from a retail point of view, the sooner that we can do that, but ensuring we do it safely, well secure more they canmake sure continue to survive. Anna thank you very much. Helen dickinson, ceo of the british retail consortium. Matt we will speak to the Morgan Stanley ceo and chairman james gorman at 3 00, and the im f managing director as well. 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 ] thank you very much. Back to work, President Trump to unveil guidelines to advise the stayathome rules. In europe, germany will allow smaller shops to reopen in early may. Crude sits near an 18 year low. Washington is considering paying