Data on industrial output offers signs of encouragement. Shares in gilead jumped in late trade on positive reports on a coronavirus drug. Openg source on plans to factories in seattle. We hear from the ceo of rival airbus. We are seeing a lot of positive sentiment across the markets today. Investors seeming to be looking to the data we got out of china. Not really a surprise we got that drop in firstquarter gdp. The big question remains if Consumer Confidence can come back as the lockdown starts to ease. Speaking of that, it is u. S. Esting, you will see futures. The question remains well investors start to see that as a move to early that could reawaken the risk of a new wave of infections. The market fairly positive. The european futures on the front foot as well. 10year treasury yields moving higher by four basis points. You are seeing dollar weakness across all g10. Some of those Commodity Currencies weaker. Oil anguish and, just before 24 a barrel. President trump has unveiled guidelines on reopening the u. S. Economy, the socalled opening up america again timeline could allow states and employers to abandon most social distancing practices, putting most of the onus on governors, the recommendation to lay out a process to return to work and public life but allow for reimposing measures if infections flareup. Give us the details around these guidelines. Annemarie good morning. This is definitely going to be a gradual approach. President trump says some states could virtually open up tomorrow, but it will be up to governors to decide. First thing that states need to do was call document a downward trajectory. That is what they are talking about, meaning those with coronavirus and flu like symptoms need to see those numbers decline before they can move on to phase one. The vulnerable must maintain shelters in place, no gatherings over 10. That phase in document another two weeks. If results look good, they can move on to phase two. Phase two for a lot of working parents, schools and daycare could potentially be reopened. Dr. Deborah birx, one of the top Health Advisors on this sent really it is for the governors to decide. They are the ones who will be looking at communities, seeing the data, so the onus is on then. That was a bit of a retreat from. He administration the president said he has total authority. We know he has been eager to get the economy back up and running. Fundsbusiness relief completely exhausted. Another hot debate in congress as it decides how much money they should put into the fund for small businesses. Nejra exactly. We dont want to assign too much weight to a oneday moving markets, but its interesting we are seeing quite a big move higher in u. S. Futures, given the risks that a premature reopening of the u. S. Economy could lead to a new wave of infections. Some are attributing the move and futures to the fact that gilead has reported that one of his coronavirus drugs is working. Annemarie the market looking for any good news to run with, especially when it comes to something that could potentially alleviate the crisis at hand. They are seeing one of their with some patients seeing rapid recovery and fever and other symptoms. The results coming out of chicago, they are tiny, but they do look promising when we look at some of the data. Nejra great to have you with us. Thank you so much. Lets get to Federal Reserve officials, cautioning a recovery will be slow to take hold once social distancing measures are rolled back. James bullard warns a depression. S among the possible outcomes dallas fed president Robert Kaplan says he expects a substantial contraction in the Second Quarter. My view is basically the same as it was two weeks ago. I think we will have a substantial contraction in the Second Quarter. We have said publicly annualized as much as 25 to 30 , but again, that is annualized, so multiply by four. We think we will start growing again in the Third Quarter and we will continue to grow into the fourth quarter. I probably would say today that peak unemployment may be closer to the mid to high teens, so maybe a little higher than ive said before, and we still believe that we will end year with an Unemployment Rate Something Like 8 or 9 or 10 , but in that range and the challenge going into 2021 will be to work that Unemployment Rate down. There seems to be a range of views among fed president s, which is what you have multiple people. You see some on the one hand saying it will be a sharp v and mary daly now saying this could drag into next year. Where would you put yourself on that spectrum . Heres a worry heres the challenge. Going into the situation, we had sluggish manufacturing, sluggish business fixed investment. Obviously, a lot of it had to do with weak global trade, but the one thing we had going for us as we had a very strong u. S. Consumer. We had a low Unemployment Rate. Household Balance Sheets were in reasonably good shape, and that was 70 of the economy. The challenge is as we come out and if later this year the Unemployment Rate really is 8 to 10 , you will have a weakened consumer who will, you would think, save more, be more careful, be a little bit more spend,nt to spin to and that is going to be a headwind for the economy and it may take a while for the consumer to get his or her footing back. That will be dependent on how quickly we can run down this Unemployment Rate to lower levels. V i think it is going to be a . The consumer situation makes me think that we will have a recovery and it will be a solid recovery in the second half of the year from the levels we are at will still have a 4 to five percent contraction for the year, but then the question will be, what is the pace of growth and what is the state of the u. S. Consumer . Those are the questions and thats the issue im most worried about. It seems to me the consumer about theirerned personal safety. How willing will people be to really participate in the economy just because of personal safety concerns . Theres three levels of issue with the consumer. One is personal safety, as you mention. This is why testing ubiquity of testing is so critical. If you have widespread testing at scale, i think that would do a lot to give consumers confidence go into the workplace , to go out to restaurants, to go into other public gatherings, but that is very much dependent on how available is rapid testing. The other two issues are job insecurity. I just saw a survey from the new york fed that said Something Like 70 of all workers are worried about their jobs, about losing their jobs, so there is that insecurity. The last issue is just what has happened to the consumer financially. Particularly, that segment of the population, which is sizable, that doesnt have much savings and lives from paychecktopaycheck, and this is going to make them even more cautious. Those are the three big issues that affect the consumer. That was dallas fed president Robert Kaplan speaking exclusively to bloomberg. Another fed president spoke tuesday saying he expects demand monetaryk, so strong support, strong fiscal support needed to get the economy back to full strength over the next couple of years. Issaid that unfortunately the situation when the economy will be underperforming for some time. Dont miss that interview at 2 00 p. M. London time. And french consumer giant loreal says he could rebound soon after coronavirus forced sales to plunge. While much of europe and the u. S. Remain in lockdown, shops have been reopening in china. Said sales are on track for march. We willp on bloomberg, hear from loreals ceo. This is bloomberg. Nejra this is bloomberg daybreak europe. Risk on today. Green on the screen and asia. Investors seemingly looking through that today. Might be putting some positivity into u. S. And european futures at the prospect of the coronavirus drug from gilead working. Some reports around that. President trump talking about an early reopening of the economy with 10year treasury yields moving higher by a few basis points with dollar weakness across the board and oil staying near 20 a barrel. Now to the reopening of the u. S. Economy, President Trump has unveiled a plan to open up america again. The guidelines could leave some states abandoning social distancing measures in a month. States are being told to document a downward trajectory and coronavirus cases for two weeks before starting the process of returning to work and normal life. Bether drop in cases should recorded before proceeding from one phase to another. Outlines three phases in restoring our economic life. We are not opening all at once, but one careful step at a time. The u. S. Has more than 600 50,000 confirmed cases of covid19 and has seen over 31,000 debts, but with unemployment reaching record numbers, President Trump is keen to get people back to work. More than 5 million americans filed for benefits last month, bringing the total number of americans hit to 22 million, erasing a decades worth of job creation. Risk on. It of u. S. Futures up more than 3 . Do not want to attribute too much meaning to a oneday move, but if we do see the u. S. Economy starting to reopen in weeks,in the next four should markets take more of a risk off tone because of the risk that a premature reopening could lead to more infections and basically a reawakening of that virus curve . Clearly, theres a lot of around this move. A couple of other considerations how are states going to react individually, and how are individuals going to react . What we see for example in china is even as restrictions are lifted, we continue to see social distancing. Very light to see use of restaurants and public spaces. Clearly a move to an exit is risk thatthere is a we get a second cycle of the coronavirus and too soon a lifting of restrictions could result in a second round of lockdowns being needed later in the year. That would, of course, add to the uncertainty and overall damage to the economy. Yeah, and we have certainly had some quite pessimistic views from fed includingovernight Robert Kaplan from dallas and John Williams from new york saying they return to normality could take a couple of years from here. What is your base case in terms of the u. S. Economy, particularly where it relates to the job market . We have clearly seen a huge spike in unemployment. Broadly in the space of a few weeks where we thought we would see unemployment peeking out. We have more to go. I think the data we have seen just in the last couple of weeks suggests we could well be on the in unemployment of 30 million. If you look at what that might , we for output overall could see a loss of gdp of some 20 yearoveryear of the Second Quarter which is our downside scenario for the economy. We have had even higher unemployment numbers, so the potentiallyks are immense. The question is how good an upturn you can get. If we get a very steep downturn, chances are that for the second half of the year, we will see quite a big swing up again, and i think we have seen some hints of that, for example in retail sales data, where we saw some declines in sales, which are not meant to replace others, where this could be just a delay in people going up to the shops again, people buying autos again, for example, rather than just postponing that indefinitely. Of the big is one questions not just for the u. S. But also for china in terms of how quickly the consumer will make a comeback with easing of lockdowns. With china then, just to remind our viewers what we got overnight, chinas economy recorded its first contraction in decades. Gdp shrank 6. 8 from a year ago as the coronavirus outbreak shut down large parts of the country. The worst performance since 1992 when official releases of quarterly gdp started. What is just as important as that gdp number, which was widely anticipated backward looking, is the retail sales and industrial output. Painful in terms of drops in retail sales. Industrial output not quite as bad as expected. You take all that together, how positive do you feel about the orlook for chinas economy prospects that stimulus is going to mitigate the effect . We have seen the recovery. Arerly in march, the data somewhat better than what we saw in january and february, and that gives us some encouragement the economy is going to be moving back towards a more what we heardbut from our colleagues in china is after a quick recovery from midfebruary to midmarch, there has been something of a stalling. Data hovering around 12 below normal levels, and reflected also in a slow recovery in the services sector. Services production fell again in march. Overall, we are expecting to see the economy picking up again, and we think we could see growth of around 1 or 2 this year, helped outlook has been and we are looking for further stimulus measures to come through. Nejra how much should the rest of the world, namely the u. S. , take its cue from china in terms of gauging what the recovery might like, given how different it is an economy and many other parts of the world. I think we can learn some lessons. The first is that it is a very shockshop very sharp on the downside, but you do see a recovery. At the moment, we are seeing something of avshaped type of recovery in china, albeit maybe not a strong initially as people had expected. I think that there are some similarities. For example, the decline in gdp on a quarterly basis was around about 10 , and that is something similar that we are going to see not just in the u. S. , but also across europe. The magnitude of the impact of this sudden shock is likely to be similar. The lesson also is that stimulus helped, and we have seen huge stimulus in the u. S. And across europe as well. Coming up on the show, the imf is drafting a plan to help developing nations recover from the coronavirus outbreak. We will hear from the managing director next. Coming up as well, how are hedge funds in the Global Economy and an unprecedented downturn . We ask the chief executive of the worlds biggest publicly listed hedge fund this is bloomberg. We are doubling our emergency financing. We are taking very decisive actions on expanding what we have, like the creation of shortterm liquidity lines, and in addition to that, we are mobilizing concessional financing for our low income members. What impressed me tremendously today is that we are making a call for 17 billion to increase concessional financing. I made this call yesterday. Today, we got 70 of this funding secured. The consensus is not there, but where we heard from the membership encouragement, again in the spirit of do what you can closely intok more existing acrs. Advanced economies have them, dont need them. Developing economies need them. The question is how to create the bridge so we can move more liquidity support to emerging markets. As we step up our work, we need to recognize that the problem is gigantic. Deployult is we have to significant and we need to move what we have very quickly. There is a hierarchy. What do you need from private creditors, for example, in order to do more for those countries you have not yet been able to help . One thing we achieved during this week is quite incredible. We got official bilateral on ators to agree standstill in the context of g20. We have countries coming together to provide breathing space to our poorest members, and in that call, we also turn to private creditors, and we are and inthem to step up the terms of the official bilateral creditors, to also ease the debt burden on low income countries. We need to recognize that this is a highly uncertain environment. We need to carefully watch how the crisis evolves. That was the imf managing director. Markets looking buoyant today. U. S. Futures moving higher along with treasury yields. Up next, remember brexit . We will talk about that next. It is back in the headlines despite the looming recession from the coronavirus. This is bloomberg. Nejra good morning from london. I am nejra cehic. Top stories. Global stocks push higher as President Trump outlines steps to reopen the economy after 5 million more americans file for unemployment. Chinas economy contracts for the first time in decades on the coronavirus. The gdp shrank 6. 8 . Jump in the airline space. On news that factories will reopen in seattle. Welcome to daybreak gear. A lot from the market to absorb this friday morning. Uhe market is looking bo oyant. Today market seem to some extent to be looking through the china data. It was expected. We solve that numbers again in terms of joblessness claims in the u. S. , we did and up slightly in the green. The nasdaq wiping out its losses. The questions about the reopening of the economy is what are the risks of a premature reopening starting a new wave of infections. Something that is feeding into the Risk Assessment today might be the news that the coronavirus drug is working. It is also playing out across assets. 10 year treasury yields are moving higher by 3. 5 basis points. Oil is an outlier. Wti staying below 20 per barrel with some important pessimistic calls on demand from opec. President donald trump has unveiled guidelines on reopening the u. S. Economy. The opening up america again timeline could allow states and employers to abandon most social distancing practices within the next four weeks. A threephase process to return to work in public life that allow for real imposing measures if infections flareup. President trump our approach includes three phases to restoring our economic life. We are not reopening all at once but one careful step at a time. In europe, increased Coronavirus Infections suggest theead up and leaders weigh risk of using lockdown measures. The u. K. Has announced the extension of its lockdown. That lockdown may be extended but downing street has been clear that no more extensions for exit negotiations brexit negotiations should be in the cards. Brussels theythe would pressure crash out of the block without a deal than half of another extension. This comes after warnings of a recession. Sarah hewitt from Standard Chartered bank is still with us. We will get to the global picture in a moment. Thing that hase been interesting is a number of analysts have come out and said they are positive on the pound particularly against the euro because of the potential delay to brexit negotiations and the u. K. May be even able to get some better terms. Would you take that view around the pound and the outlook for brexit negotiations as well . Sarah the announcement we had yesterday from number 10 suggests quite a blow. There had been a broad assumption even among senior members of the government that the u. K. Would extend the negotiations would ask to extend the transition period given the current circumstances. If the deadline remains the end of this year, that does not allow much time at all for negotiating a deal. And that does leave the risk of the u. K. Crashing out of the eu with a no deal brexit. With all of the interruptions to the supply chains that it would imply. In terms of the pound, i think there is a separate issue here which is how well is the economy likely to emerge from the coronavirus . And more importantly may become a what are the risks around europe . Several European Countries have suffered tremendously from the virus while others like germany has have been more resilient. There is a risk though that we will see more tensions among the euro area countries. Italian yields are moving higher without a strong commitment or any commitment at all at the moment for commonly issued bonds. There may be a real question mark over the euro and i think that may be uppermost in the markets in terms of concerns and why sterling might be favored against the euro. Anda in terms of markets also the stimulus we have seen coming through, are you confident that risk assets can remain supported through the rest of the year simply based on all of the stimulus, monetary and fiscal, either already in the pipeline or that policymakers are likely to commit to in the future . Sarah clearly, we have had a huge amount of stimulus and more is coming through. With announcements just now from india. And we think we will get additional stimulus from the and increasingly more from europe. But i think when it comes down to risk assets, then the virus and the risks of a second cycle is are also going to be very significant because if we do find, for example, that it is likely to take longer than markets currently have priced in, before a vaccine is ready to roll out at scale, if we see more examples where people who are infected twice over, that will reset markets i think. Further lockdowns are likely to be very damaging economically and i think that has got to be the consideration when it comes to how comfortable countries are at taking those risks at the moment. Nejra exactly. The point i have been making through the show. Risk assetsms like but treasury yields as well which are moving higher seem to be looking through that factor that the reopening of the economy could risk a second wave. On the china data the economy has recorded its first contraction in decades. As the coronavirus outbreak shutdown large portions of the country. 1992orst performance since when official releases of quarterly gdp were started. Even more important to a certain extent, retail sales sliding 15. 8 in march. Consumers remaining wary. Will that Consumer Confidence return as lockdowns ease . A smaller than expected contraction in march and industrial production, 1. 1 , a bit of a bright spark. Boeing shares jumped. A 25 billionter dollars aid package from the u. S. Treasury department listed the airplanes confidence the airlines confidence in reopening. Aboutrbus ceo spoke to us the challenges they are facing. Take a listen. We have to face a very unprecedented situation. We are facing that reality now. Situation of the airline the situation of our customers is a very difficult one. Our planes are on the ground which is unprecedented at this global scale and we have to adapt. We have challenges as well on the supply chain. We are combining all of our data points to move forward and what find alast week was to new production rate to give the right direction to our partners and suppliers and adapt to the change in the demand. Our customers are in a new situation and we have to adapt to that new situation also. What are you hearing from your customers that united in on ited states early that travel is essentially zero . There is a large diversity of situation around the world. The situation is not the same country by country, region by region, or airline by airline. To speak to our customers individually to find solutions one by one to their concerns. And actually the situation is today what it is you mentioned the situation of united. You have a similar situation with other airlines. It is a very complex situation. It is a lot of work for all of us to adapt and find the way forward. There is still a lot of uncertainty on when airlines will be back to service them back to normal and what will be the shape of the recovery . That is what we are working on at the moment. Flick do you think about what has been given to certain carriers . I think the priority is on rescuing the airlines. They were the first hit by this pandemic. No passengers or very few are flying and the priority from my perspective is to support the airlines going through this very difficult situation. And supporting the airlines are also the best way to support the worlds supply chains. We want to keep that supply chain alive in a very unprecedented time of challenges so that we can keep moving forward and recovering when times will be better. It looks like going, your boeing, your competitor, will be asking for a. Do you will be asking for a id. Will you be asking for support . We are asking for support in different forms but not in capital from the government. Ok. That is good to hear. In terms of how you see this story developing, how much visibility do you have at the moment . I would imagine very little. The Investment Bank came out with a report saying they see aircraft deliveries down 40 or 50 over the next 35 years. Is that what the future looks like to you . Or do you think the shock will be shorter and sharper . Balldo not have a crystal and we are all trying to assess the depth and the duration of the crisis. We think there will be a large difference between the wide bodies and the narrow bodies. Some will recover faster. Somethinge this year, like 40 . It is still very dynamic. We have seen the recovery in terms of passengers flying behind us in china already. China is very interesting. It is a place where we can try to assess what will happen for the rest of the world. I think that figure of 40 or 50 over the next 45 years looks quite pessimistic. Nejra that was the ceo of airbus. Coming up, the u. K. Looks to extend lockdown measures leaving millions of employees unemployed or on furlough. We find out if anyone is still hiring. This is bloomberg. Nejra this is bloomberg daybreak europe. I am nejra cehic in london. Outbreak hasus changed every aspect of our daily lives. Says it hopes to mobilize workers into the essential jobs needed to respond to the pandemic. Joining us now is josh graff. Delighted to have you on the show. What sort of trends have you seen in terms of hiring since the Coronavirus Crisis in the u. K. . Josh i dont think there is a personal business that has not been affected by the coronavirus in the u. K. From speaking to family members who have had to shut down small been unemployed, what an incredibly difficult period it has been. We went from 28 million members in the u k and the hiring rate has dropped 50 year over year and that is a number we extend to continue on a downward trajectory in the coming weeks and months. Having said that, there are are there are sectors that are essential to the pandemic response. If you work in transportation and logistics or hardware and networking and perhaps not surprisingly in health care, we have seen a significant increase in the number of job post in those areas. In health care specifically, roles on the front lines people doing hero work. Jobs jumped 38 . Having said that, there is another group of industries that i would argue are weathering the storm. Financial services. I. T. Up and down a couple of percentage points. And at the other extreme, you have Industries Directly affected by closures and event cancellations. Nejra absolutely. And travel down 47 according to your numbers. You point2 but as out down to supermarkets rather than to do with high street retailers. A lot of people now also working from home and using tools like zoom to hold meetings and even corporate exercise programs. What is linkedins role in keeping offices connected . Josh it has been heartwarming when we see how our community has come together to help one another out, share advice, to really help one another navigate through such a difficult verio do over the last few months and in many cases helping one another find new jobs as well. Weve seen a 60 increase in the amount of content created on the platform. And a number of conversations taking place between members on the platform. We have noticed we noticed early in the pandemic that our members were asking for a timely and accurate and credible information about the pandemic. And the actions they should take. Our Editorial Team went to work to curate content around the pandemic from credible sources including the government, the nhs, and the World Health Organization to keep our members as informed as possible about the actions they should take and the impact it was having on the workforce as well. And another interesting trend we have seen is yes, people do come to linkedin to find a job but you mentioned earlier this surge in learning we have seen on the platform and i think that is perhaps because people have been furloughed or they recognize the need to develop new skills to pivot to a new industry. As a result of that, we are now offering 275 free courses for all of our members across the u. K. Nejra what have you learned from the past few weeks in terms of any trends we might see take hold in the u. K. Labor market when we get into the Recovery Period . Do you see the labor market changing in any meaningful way . Josh i am an optimist by nature and when we look at some of the data coming from china where they have relaxed some of the strict dirt containment measures , although we have not seen a assuming the measures the u. K. Government has put in place to flatten the curve or of fact it over the next coming weeks and months, i would hope we would see a similar tragic great to that of china similar trajectory to that of china. About i also want to ask the role you were playing around any fake news related to the coronavirus. Josh it is important to keep in mind the content in which linkedin operates. It is a professional atmosphere and as a result, our members are incredibly conscious about what they published because it can affect their professional identity and career trajectory. Perhaps more so than on other social platforms, they are conscious of what they publish. People will keep you honest. Having said that, our professional Community Policies are very clear and posting misleading content is not allowed. , we willflagged investigate and take swift action if necessary. Nejra thank yous much for joining us, josh graff from link in. Turning to banks, we spoke to Morgan Stanleys chairman and ceo on the economic fallout from the coronavirus pandemic. Take a listen. Doing great, thank you. I am completely recovered. And to be perfectly clear, i had the virus but i was one of the lucky ones. I was not hospital is ice i was not hospitalized. My lungs did not get infected. It was unpleasant but it was manageable. My heart goes out to folks that are not that fortunate or who had Underlying Health issues and who have really struggled and tragically passed away. It is a curse. I wish everyone well who gets it hydratedthem to stay and rested and wish them the best. I second those wishes. James, i was told yesterday that this is much worse than the 2008 financial crisis. What kinds of base case of assumptions are you making at this point for the recession and the recovery . James im not sure i agree with that. Gdp theomic impact, the client is much worse but it is so specific and it is built around the virus. What kind of world will we have with immunity to it or the right testing . There are so many unknowns. It was a fundamental collapse of the whole Financial System and had it had the system not been rescued, who knows what longterm damage might of been done to the economies. Are both truly tragic situations. From our perspective in running a company there are a few things to focus on. Number one, we have millions of clients trading trillions of dollars all over the world. Our plan has to work. We have to facilitate clients doing that so they can manage their businesses. They have to to have the ability to manage their own Capital Needs and we play a Critical Role in it as the number one equities player in the world, one of the largest Capital Market businesses in the world but the plan has to work. 90 of ourith employees at home, we have had almost no issues for our plan which is a remarkable testament to our teams. The second thing is you do your bit. We voluntarily cut back our buyback to zero. We thought it best to preserve our capital to support our clients in need. We are also doing what we can in our communities. The third thing is to make sure teams are properly coordinated giving the remote isolation everyone is going through. We spend an enormous amount of time communicating with them. What would it be like to bring people back to work . That was Morgan Stanleys Ceo James Gorman speaking to erik schatzker. Sarah hewin is still with us. Has everything we learned about has everything we learned give you more faith in the strength of the recovery on the other side of the crisis because the Financial Sector is in a better position than it was in 20082009 . Was very wellnt made that this is a completely different situation from 20082009 and it is a very steep decline in activity. We see that around the world. And it is way steeper than anything we have seen going back to the great depression. Have theo not fundamental issues and uncertainties and crises that grew up around the Global Financial crisis. Where as at that point we saw a rolling series of negative quarters going on for five or six quarters, this time around we think we are likely to see the first and Second Quarters particularly in the u. S. And we do hit very hard but see a strong recovery in the second half of this year. Nejra sarah, great to have you with us. Futures and u. S. Powerfully on the first foot on the front foot. This is daybreak europe. This is bloomberg. Good morning and welcome to bloomberg markets, the european open. I am anna edwards alongside matt miller in berlin. Good morning. The markets today they are moving in the right direction. The futures are a point higher. Recovery is not far off. And progress on a coronavirus treatment. Cash trade is an hour away
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