Transcripts For BLOOMBERG Bloomberg Daybreak Asia 20240713

U. S. Trading after west texas futures end in negative territory for the first time ever. Ups sees some light at the end of the virus tunnel. The ceo tells us ecommerce is almost thriving compared to traditional sectors. Lets take a look at the oil lets get to sophie kamaruddin, who is taking a look at highlights for us in hong kong. Sophie the relative resiliency of the markets we have seen of late have brought several benchmarks in the region of asia into bull market territory. That will be tested in the face of this oil rout. Futures. Eing mixed nikkei futures in chicago while kiwi stocks are extending mondays drop. Lets switch up the board to check in on signaling perhaps the recent optimism and equities may be unwarranted and this money, gold resuming losses but still closer to its high of the year than it slows that were hit in february and treasury futures are now unchanged after we saw the u. S. 10 year yield with alltime lows on monday and the dollar little changed as well with 2020 already the best year for the greenback since 2015. Lets flip the board to check in on oil amid an ugly role for wti which has exacerbated the driventy with labor contracts. Oil for may delivery is staying under zero, in negative territory, while the more active june contract that is trading above 21, keeping that gap between the two at the widest ever. Shery. Lets bring you someone who has deep knowledge of the oil industry and how this historic lunch will affect it and the market. Dan everhart is the ceo of canary drilling services. President trump earlier today saying he will look into the idea to stop saudi Oil Shipments given the historic plunge in prices. Both due to the lack of physical thee to store oil and just destruction of oil demand out there. What should the United States do . Is i think this catastrophic or apocalyptic if you are in the industry. Look, we are just flat out of storage, so i think we should use emergency measures to stop for an oil from being imported and to force refiners to use u. S. Crude right now and the time of this pandemic, but u. S. Producers have got to slam the shuts on production and wells, not just let the wealth decline and the decline curves kick in like they normally do in a bust. Shery we have an vaccine include explorers shutting down 13 of American Drilling last week. How is that affecting your business . Dan it is affecting our business in a drastically negative way and i think those numbers on account what is happening on the ground. We think about one third of rigs have been shuttered, which is beingof the market count, down 20 . There are a lot that are effectively shut down but our business is being drastically negatively impacted. I think you will see probably 40 of u. S. Service companies file for bankruptcy in the next 150 days if the pricing stays below 30 per barrel. What would you need to see to suggest to you that theres going to be any sort of improvement in these trading conditions . Ii expect trading expect trading to be improved from this a drastically negative number when we flip over to the june futures contract. I think there is more hope that more states will be open and oil demand will ratchet back up somewhat, so i suspect oil i expect this to be a bit of an idiosyncratic onceinalifetime situation with oil being negative. I expect oil to swish the positive within the next two weeks and to be very, very low levels that are basically thirtyyear to 40 year lows. If you look at the companies, you say such a huge chunk of this part of industry is going to be taken out because of these unprecedented levels that we are seeing and the tension between oil prices and a complete lack of Storage Capacity at this point. What would you be pointing at in terms of resilience within the industry in which players are likely to survive . Dan well, i think this really diamondk to the jamie contract of having the Balance Sheet. That is who i would bet on right now. I would look strictly to Balance Sheets and make a decision on that. You will see names like and baker hughes do better and you will see names that are overly levered in the space such as apache or Service Companies really likely to be taken out for the bloodbath that is about to happen. Shery we have an Upcoming Commission vote on tomorrow. What are you expecting, and even , doesdo get a ruling here the commission really have the resources to regulate production . They have the right to regulate production, not actually testified at that hearing last week. They have the right to do that and they have done so. I dont think they have the resources to do it. I do not think they are set up to do it in this time of pandemic. I dont think it matters because i think the market will beat them to it. Seeing int are we terms of the free market just continuing declines in production, but how about some that perhaps need to be mandated for a real impact . Like we saw with the opecplus meeting, they really want the u. S. To make active efforts to cut production. Think that is a good question. The u. S. Is bound by antitrust rules and lack of collusion allowed in the u. S. Market, but companies that respond to the market, Public Companies that respond to the market are actually going to be quicker and have actually beat opec to the punch. It is just not reflected in public data. I expect u. S. Production to be or 9 millionlion barrels, a decrease of 4 Million Barrels a day, which is magnificently large. Haidi we have already seen about 13 of u. S. Drilling fleet being shut down this week alone, about a third have been shut down. Where does it end do you think . How much more Downside Pressure and how many more closures would you expect to see . Dan i think we have still got a ways to go. I think we are going to drop somewhere in the 400 rigs because some people are hedged and some people have got a kind of broader optimism about what happened. What will happen. I expect production to fall among mediumsized independents, 2 billion to 4 billion market cap. Those folks are really going to focus on cash, hoarding cash, and on Balance Sheet strength, so they will stop drilling in the shortterm. Shery really appreciate your time with us. Canaryrhart, ceo of drilling services. We will get much more analysis on oil, ahead, including a conversation with nasdaqs of energy and utilities, who will be with us from new york. Risk of a what, the shaped recovery is very real. We will be speaking with the cio, next. This is bloomberg. You are watching daybreak asia. I am Karina Mitchell was first word headlines. Deaths in the u. S. Were the lowest since the start of the month. Governor andrew cuomo said the data indicates the infections peak may have passed. The top pandemic expert, dr. Anthony fauci, is warning people protesting against the lockdown that reopening the u. S. Economy too soon may cause more serious harm. Meanwhile, Mitch Mcconnell says the senate will vote tuesday on an emergency virus stimulus package worth about 500 billion. Congress and the white house move closer to agreement. The plan would add funds for an exhausted Small Business program and provide money for Virus Testing and for overwhelms medical centers. The measure would require inanimate consent among senators. Employment in Hong Kong Rose for a sixth straight month, hitting its highest level since october 2010. The total figure for people and work slumped by 3. 6 , extending the longest stretch of rises since the aftermath of the financial crisis. The coronavirus and months of antibanking protests have battered the economy with the labor force shrinking by more than 2 . And the city where the coronavirus was first reported is rejecting any role in spreading the infection around the globe amid increasing speculation in the u. S. And elsewhere about the origins of the pandemic. Virus escapedhe either by mistake or was deliberately released, telling Chinese State media that the socalled patient zero had no contact with his staff. 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. I am Karina Mitchell. This is bloomberg. Haidi. The director general of the World Health Organization says the worst may still be yet to come when it comes to the coronavirus. Saying that the crisis is not over and many politicians and advises do not understand the nature or the danger of covid19. Fromackenzie joins us now beijing. What is behind this dark warning from the who chief . Tom saying the worst is still ahead, and again, pointing out that people still do not understand the nature of this disease, and certainly, there has been issues around transmission spread and other elements of this disease that are still largely unknown. He previously warned about the spread in africa, so that could be something he is concerned about. Obviously, countries on that continent do not in many cases have the Health Systems in place that would be able to really cope with a serious pandemic of the scale, so that may be a concern for him. Moves by some countries in this region, asia, but also in europe, looking to lift their lockdown. There may be a warning from him as they start to contemplate that in capitals around the world. He also pushed back against those u. S. Claims that the World Health Organization were not transparent and pointed out that the u. S. Centers for Disease Control officials have he said there is no secrets and we do not keep things confidential. Broadly, the top line is there is still a lot of concern about this virus Going Forward. Shery give us a little bit of an update when it comes to countries trying to ease their lockdowns. Tom one country that is in focus, starting to moderately see the infection rate slow is the u. K. Prime minister johnson is under pressure to ease some of those restrictions but it is they are quite worried about a second wave. The restrictions have caused the economy led to a surge in welfare applications as well. Over in germany, angela merkel, the chancellor, is also cautioning against russian tes to easeions restrictions. They did open small shops in most states in germany. Merkel saying the option to reimpose restrictions if there is a second wave does remain for her and her team. About 2002 hundred 50, so fewer than the previous day. Government officials saying that country is now doing decisively better and the Health System is better equipped. In this region, singapore recorded more than 1000 infections. In fact, 1426, for the first time above 1000 in singapore. It does point to the concerns state thatn a city has gotten this far. Relatively well under control. Shery tom mackenzie, our coanchor in beijing. Lets stay in europe, which is facing its deepest recession in living memory. Widespread job losses. Banks do not need a state backed institution to help them shed bad loans. The chairman told bloomberg that most lenders are Strong Enough to deal with the crisis. It affects only a small portion of european banking system. Compared to what is to be considered normal. So only in certain banks and certain countries. I will not consider this as a systemic package because most banks have enough capital to the new waves of which will arise from this crisis. What exactly is this outbreak . Is it as much of a shock politically as it is economically . Europe . A crossroad for it is unclear if this is emotional because people want solidarity at any cost or whether they really need it economically. I think it is very difficult at this stage to assess the on italy compared to other countries. European countries are affected in the same way, some more than others. The development of the pandemic, if you look at countries like belgium, spain, i think we are all in the same boat. The point is that the situation is different. A lease starts with the higher debt to gdp ratio, and lower italy starts with the higher debt to gdp ratio. It may need stronger support the political issue is more relevant right now than the economic issue in the sense that there is an issue of trust between the leaders. There is an issue of legitimacy of the political leaders with respect to their own domestic Public Opinion. Of they, a large part Public Opinion has lost some trust visavis the european institutions. For a series of reasons, but also which started first in italy, and then once more, the scale of wishes, some would like also to go to a true federal system that would guarantee also but this politically is i guess happenly and cannot without a major change in the trees and the major transfer of sovereignty from the National Level to the european level, so this may be more for the median term rather than last week. Should we talk about splitting Government Debt with Debt Forgiveness . When we look at sustainability throughout the world, i think we tend to underestimate to issues. One is that Interest Rates are going to be low for very long. They were already low before a crisis. They are going to be lower even for longer because there will be an excess of savings for investment at a global level, so low Interest Rates large parts of the public debts. In the Balance Sheet of the central bank. Throughout the world as in europe. A sickly when countries have to refinance, part of this refinancing is taken care of by the central bank. So the pressure on Interest Rates is going to be lower and i debt sustainability will be much improved by the intervention by the central bank in europe. The ecb will hold 30 of the debts of the Member States which means that even if italy has a debt to gdp ratio of 160 or more, 30 of that will be in the hands of which means that in practice, thein the markets is going to be around 100 , 110 of gdp. Bitave to rethink a little this concept of sustainability which needs to be better than what we may think based on indicators. Socgenthat was the chairman speaking exclusively to bloomberg. You can get a roundup of the stories you need to know to get your day going in todays edition of daybreak. Bloomberg subscribers can go to dayb on their terminals and its also available on mobile in the bloomberg anywhere app. You can customize your settings so you only get the news on industries and assets you care about. That matter to you. This is bloomberg. Shery lets get a quick check of the latest business flash headlines. Virgin australia has collapsed, becoming the biggest victim so far. The carrier called its administrators after the pandemic crippled the demand for tickets and cut off all income. Richard branson warned the version operation would not survive without state aid. His offer he offered his caribbean island as potential collateral. Analysts also continuing to paint a bleak picture of the u. S. Airline industry, saying job cuts at the big three american, united, and delta fromcarriers are banned cutting jobs through september 30 as part of washingtons 50 billion bailout, but with industries seeing difficulties into 2021, they are concerned any recovery would come would not come quick enough. Southeast asias most valuable startup says the coronavirus is the worst challenge the company has ever faced and will require what it calls tough decisions. The ceo has written to investors and partners saying the pandemic is the single biggest crisis to face grab in its eightyear life. Macaus weekly growth gaming to 19thpassed april 14 fell 97 year on year according to a report from bernstein. Income of three million u. S. Dollars per day. Water restrictions in macau, hong kong, and china, because of the coronavirus, have seen daily visitor numbers falling to the less than few hundreds compared to 100,000 per day in normal times. Haidi lets take a look at how asian markets are set to start today trading. We have trading in new zealand underway where we are seeing a bit of a reaction when it comes to the rbnz announced saying that it was considering looking at loosening mortgage lending restrictions. Not enough to support the lenders,. 6 lower for kiwi stocks, this as they outlined that ratcheting down for the restriction level to stage three as of next week. Elsewhere, we are seeing ready consistent downside. We had u. S. Stocks falling from the six week i on account of what we have seen in oil trading prices. That historic plummet into negative pricing for the wti may contract. The only story and markets. We are seeing negative trading when it comes to the future session in japan. In australia, looking like we will see weakness as well across the energy and mining sector. Coming up, stage c is missed capital sees some risks. This is bloomberg. Haidi breaking at the moment, Goldman Sachs coming out, warning of a potential further ontress for may wti futures tuesday. Of course, we have pared back some of those losses on the may futures. Barrel. E are at 5 per Goldman Sachs saying the oil pledge is symptomatic of unprecedented oil surplus, saying the june contract to face downward pressure. We are at around 26 per barrel. Lets turn to sophie for another check of the market. Sophie the jury is out as to whether or not we will see a repeat of the extreme moves we saw in u. S. Oil markets. We can see on the board right now, you have wti may futures narrowing that drop we saw overnight as we slumped to 40 below zero. We have it up at around 5 a barrel and we are seeing the june Contract Trading above 21 here. That could be the next contract to face downward pressure but taking a look at what is going on elsewhere, we have Commodity Currencies in focus, paring overnight losses. You have the canadian mooney stronger by. 2 as investors assess the extreme moves in the markets. Orshould focus on the fourth fifth contracts instead of the aussie dollar heading higher. Onmay have more details yield curve control progress as well as plans for further kiwi and the kiwi dollar jes staley here. The rbnz sharing plans to remove restrictions on low deposit home lending and a quick check on some stocks to watch and australia. Oil in focus with earnings taking a hit from the slump in asian gas demand. Also in view on a Third Quarter update but a weaker commodity complex and the virus impact has been forecasting lower Spending Plans with softer targets for copper, nickel, as well as thermal coal. Ubs cut the price target by 22 after canada dropped its multibilliondollar bid for the australian fuel retailer. Haidi. Guest our next wellplaced. Absolute return. 6. 2 percent in march. Asxsar out performed the slump. Sean fenton is with us. Great to have you back on bloomberg tv again. How concerned are you about this demand destruction we are seeing across oil . Obviously, what happened overnight, in its most simplified form, can be seen as just an extreme technical glitch, but how much does this weigh on your investments, particularly the Energy Sector and australia . Sean it is in australia. Sean it is affecting undermining demand underlying demand and Storage Capacity as well. As with the breakdown in markets everywhere, we are worried about some of the second order effects , for instance, with oil, they have been trading where the financial losses that also importantly for the u. S. Economy. It is starting to shut in u. S. Onshore production, getting cuts as well. Implication for the services companies. As with all this economic dislocation, it is the signal that washes around, creates losses, and creates stress in the financial system. Weakness in the economy that is a bit cautious about earnings and the world moving forward. I am wondering about the dislocation we are seeing in energy markets. Does it have any upside consideration when it comes to the effect on consumers . I want to know the australian anz Consumer Confidence index actually, so maybe not what we would have expected to see given everything that is going on, given the pressures on the australian economy at the moment. We would not expect to see a rise in Consumer Confidence, but does the oil price story perhaps create a bit of an uplift, particularly, as you know, the Australian Household situation how a be in terms of lot of households are in this country. Sean it gives the amanda little demand a little bit of a boost. A little bit of Consumer Confidence tracking the stock market closely at times as well as opposed to it is probably reflecting a bit of the relief rally. The stock markets down also. We are seeing the virus get under control in terms of infection rates stabilizing and socalled curves flattening. That is definitely giving a boost to Consumer Confidence but it is still very weak and importantly, we have already hit the worst case scenario, and that is not necessarily the virus getting out of control, but actually shutting down the. Lobal economy beside it the Australian Households have gone into this with a record level of debt. Flattened thed yield curve. You have fiscal stimulus occurring but that is really needed just to offset the huge slump demand. You have got a lot of particular areas of weakness. Probably one of the biggest is growth on migration and International Students in exporton, tourism, big earners paid we will not see International Travel bounceback quickly. International borders, that will be one of the more significant drags for australian growth and a big impact on education and tourism, with effects through the economy. And Consumer Confidence Business Confidence they are all very weak. Shery does it help at all that china perhaps could be stabilizing faster than the rest of the world given how dependent the aussie economy is on china . Sean it will definitely help, but you know, we have seen china bounceback. Retail not seen spending in consumer households so there is caution. We will have to see how that bounces back. There is a bit of an expectation that china stimulates infrastructure. Also facing demand destruction across the world in terms of iron ore. We are a little bit cautious of the strength in the iron ore oil. And what like impact in terms of trade. China will have to do quite a lot to keep iron ore buoyant when you have demand destruction across autos and Household Goods and the export market for china. Internally, we do not see property markets coming back as strongly in china. Theres still a lot of headwinds there. It is another risk to the australian economy. That we saw that issue was perhaps out of the woods when it came to this pandemic, we are now seeing rising cases in some countries like singapore and india. What is the risk that given we could continue to see a number of waves in terms of the virus spread. We could see a w shaped recovery for these asian economies. Sean i think w shaped central case for the world economy. The snap back in activity when the lockdown ends because it is so severely depressed. Certainly outbreaks and social isolation and lockdown, a very material possibility. The other thing to be cautious on emerging markets is developed markets are quite reliant on Central Banks to cut rates, print money, and finance fiscal differences as well. Emerging markets will turn out institutions. He we struggled to recover smoothly through these knockdowns. Slowing three emerging markets. Impacting global growth. Shery sean fenton, thank you very much for joining us today. Coming up next, has the u. S. Become too reliant on china for its intellectual jewels . Our next guest says the pandemic has made it clear the u. S. Needs policy that creates less reliance. Stay tuned for the founder of this is bloomberg. Karina you are watching daybreak asia. I am Karina Mitchell with the first word headlines. The u. K. Government is resisting pressure to ease its virus lockdown, fearing a second wave of the pandemic. Boris johnson discussed the matter with senior ministers, urging caution. It brought the u. K. Economy to a near halt. U. K. Extended the shutdown for three weeks, saying the infection is approaching its peak. Singapore saw its highest daily number of virus cases monday with more than 1300 new infections. The figure was driven by illness among Migrant Workers and dormitories. Indonesia is imposing urgent Virus Testing and tighter social restrictions as infections more than quadrupled since the start of april. The indonesian death toll is the highest in asia outside of china. And while, israeli Prime Ministers imagine in netanyahu and Benny Gantz Benjamin Netanyahu and benny gantz have reached a deal to share power. The agreement ends a year of political paralysis and was made possible after benny gantz dropped his refusal to work with ned yost to. Netanyahu. And beleaguered indian tycoon is one step closer to being returned to his homeland after losing an appeal against extradition from the u. K. The court upheld a 2018 ruling that would send him back to face fraud and Money Laundering charges. He was arrested in the u. K. Three years ago, accused of defaulting on more than 1 billion of debt at his now defunct kingfisher airlines. 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. I am Karina Mitchell. This is bloomberg. Shery. Shery private equities, another in a long list of factors being hit by the coronavirus but firms may be getting some help. Last week, the fed outlined plans to find 2. 3 billion in aid to affected Companies Including private equity firms. Joining us now is the cofounder and managing partner, eric. On howve us an insight the coronavirus pandemic has affected your firm as well as your Portfolio Companies and your relationship with easing back. Eric thanks for having me. It has impacted our companies. We invested early, so we are typically one of the First Investors in a company and they are often thinly capitalized, so every dollar really counts in terms of how much runway they have to keep the business going until they can generate sustainable revenue. It has been a mixed bag. Some companies are thriving but others have been hit very hard and had to take drastic measures, sometimes laying people off, etc. Shery given how important cash is during this very uncertain time, are you keeping your powder dry or are you looking into new opportunities out there . Doing both. I mean, we are collectively making new investments. Our criteria heads involved right now with the uncertainty around when things will open back up again and really what the environment will look like after things start to open up. We are being more selective and taking that into account. We have also allocated capital to support our existing roundses as they raise of financing to solidify their Balance Sheets right now. Haidi what are the opportunities . Because when you think about the amount of dislocation, the amount of consolidation that is going to happen across almost all industries on the others out of this pandemic risk, what is kind of the strategic opportunities . You imagine there is an embarrassment of riches in terms of the prospects for private capital at the moment . Well, i think there is a lot of opportunity for private capital up and down the stack. We invest very early so i think valuations have changed everywhere up and down the stack. Very early stage all the way through later stage growth towards equity and buyout. Software enabled Business Models so for the purposes of a new normal in that comes out of this, i think everyone has become more reliant on software, whether it is products like zoom for a business conferencing, or getting things done remotely relies on Software Enabled or closed so i think there will continue to be a great opportunity for companies that are innovating around software and enabling individuals to live enablinges software their lives to get work done and what could be a new Work Environment that is less in person and more distributed or remote. There is a real conversation that is starting to be had. You are talking about the nation level policies that in this rush to reopen, to return to normal, questioning the idea of what the new Better Normal should be. In terms of an industrial policy, in terms of how companies should be aligning themselves and how, you know, governments should be prioritizing and the Lessons Learned out of this pandemic, what does the solution actually look like . Erik i mean, one of the things we have seen in the United States is from a manufacturing perspective, there have been shortages of certain products and medical supplies, things like that, in the u. S. , and over several decades, the u. S. Has shifted a lot of its manufacturing out of the u. S. To other places. That has been one realization that came out of this. From an industrial policy perspective, there was much more discussion now in the u. S. Around modern manufacturing and how that fits into the future of the u. S. Economy versus what i think has been the Standard Operating Procedure for several decades really is to be production or manufacturing and other places in the world that might have lower cost manufacturing in the United States. With the advancement of robotics, things like that, places like the u. S. That have been focused more on being information economies, not manufacturing economies, can bridge that gap and use automated and robotic factories, for example, to drive down the cost of manufacturing. It will take investment, but i think it will lessen the supply chain shock that some countries have been seeing like the United States have. Market capital cofounder and managing partner, erik rannala, joining us. Ups is seeing increased demand for medical gear and ecommerce as the coronavirus grounds of their operations to a halt. The Delivery Company is among those deemed a Critical Infrastructure business amid the outbreak. David agni told us how that could affect their bottom line. Say, what i would industrywide, from a whole microeconomic standpoint, is obviously a lot more health care, pep, ppe, and critical shipments like that, and i think you are seeing that all across the industry, and with businesses being closed and with people sheltering in place, you see more ecommerce or more residential deliveries across the industry. That would be the two biggest things and the good thing about our flexible Logistics Network is that it allows us to meet the needs of governments, meet the needs of our customers so it is an interesting time. That is for sure, david. You justp on what talked about. You really have pushed hard on automation and bringing the computer, the digital age, into your delivery system. Is this experience going to expedite that, drive farther and faster than you are doing already . It makes us thankful we have invested in the automation and invested in our transformation initiatives, which were all focused about speed and agility, and of course, with the situations we are facing right now, that stresses the importance, but even when this crisis is over, we are living in weime of great change, so think we will continue to build upon that, so it is just more important now than ever and i do not see that diminishing once we get through this crisis. Anythingt tell you that was helpful to us about restarting the economy, what you have seen shutdown, what you think might come back . Erik i think we can i think we can add a lot to that story and i am proud to be part of the Great American economic revival group, one of them, that the president is leading. The thing that we have to offer is since we have been declared a Critical Infrastructure business, we have been operating through the heroic efforts of our ups drivers and loaders, pilots and mechanics, throughout this crisis, and so, we have learned a lot, and one of the things that i will be sharing with other businesses that have to close down is what we see works and what we would recommend they do and not do, so i do believe that we would add a lot of value to that discussion. Talk about those employees paid what are you doing to keep them as safe as possible . What extraordinary links are you going to . Erik that is my favorite that is my favorite subject, talking about our employees. There is an Amazing Group of people that realized we are a critical business, and they have stepped up to the plate like i have not seen. In fact, they have Record Service levels now and i could go back 46 years, so i cannot speak for the companys history, but i can speak for a good portion of it, and the first thing, it is all about the safety. We want to be a critical business and if we believe we have got to move Health Care Supplies and stuff around the world, then we have to take care liker people, and things and these are just really important things. Emergency paid leave that was outside of our Union Contracts that we agreed to to let our people know you dont need to come to work. We will give you paid leave. Enhanced cleaning of our buildings and our package goers, and everything people touch, of course, following cdc guidelines and sanitizing supplies and masks. Haidi david abney. Do not miss these big guests on bloomberg tv later today, including blackrock vice chairman philip hildebrand, and other guests. At the breaking news moment out of south korea. We are getting the export and import numbers for the first 20 days of this month. A contraction of 18. 6 year on year for south korean imports in the first 20 days of april. Exports falling 26. 9 year on year for the first 20 days of this month. Chip exports falling 14. 9 year on year. This of course coming on the back of some stabilization we saw in the month of march after the trade war between china and the u. S. Subsided. If we stay at these levels, a contraction of more than 20 . We would have seen such a false for 2008 financial crisis. Plenty more to calm. This is bloomberg. Shery lets get a quick check up on how markets are trading at the moment. Kiwi stocks falling for a second consecutive session. We are waiting for the government to ease pandemic restrictions. Aussie futures at the moment under pressure, to the downside. We do get rba minutes for their april policy meeting. We are expecting some Additional Guidance on the scope and scale of unconventional policy programs. Nikkei futures also down more than 1 . We have seen that japanese yen trading in the narrow range. Kospi futures losing ground more than 1 , haidi. Another lineup of guests. In our next hour of daybreak asia. We will be talking all things oil with nasdaqs representatives. Her markets outlook for us and we also have the London School of economics visiting senior fellow to analyze chinas politics, the economy, and its handling of the virus. This is bloomberg. Haidi i am haidi stroudwatts in sydney. Shery i am shery ahn welcome to bloomberg daybreak asia. The World Health Organization says the worst of the virus is still to come. Pandemic is quickly crippling demand for energy and oil recovers from a collapse in training after west texas futures enter negative territory for the worst time ever. Weakening chinas economy which was already struggling and some say the export driven model is over. Japan, south korea and australia coming online. Lets get trey to the action with sophie kamaruddin. Brent opening this morning and it has rolled into the june contract and we are seeing it now trading higher by 2. 7 percent after holding up on monday. Bear in mind storage concerns are not a star compared to w ti. Not a stark. To to fivee nikkei off 1 . Strategists warning the nikkei off one percent. The kospi off. 6 extending mondays decline. Falling 20 xports year on year in the first 20 days of april, create shipments to china falling 70 . Off. 1 . Korea the a6 bab the stock off 1. 5 after its trading update. The iron ore output did jump 10 as we see a rebound in china still sector but bhp lowered its given concerned over a second wave of infections of coronavirus. Debby ti futures, we are seeing a rebound in new york crude with the front month contract during the drop, still below zero four wti futures. Futures. In themore work to come oil markets. The nasdaq director of energy and utilities joins us now. Great to have you on again. Capoubt this is an extreme technical blip we have seen because we are so close to the barrier to contract on tuesday. Is there any indication things will improve . Or do we expect the signals further voluntary volatility to Common Future contracts . I agree and i think there was a technical level in the sense that you have one fund or possibly multiple funds that were not able to exit their positions because there are no buyers on the commercial side, refiners, utilities and airlines are not buying. Also running out of storage. Is negative reach for future contracts in june and beyond to the extent that there will still be no place to put those barrels either. Producers shut production a fast enough rate and the economy opens up. But we are dubious about the economy opening quickly because even if there is positive news on coronavirus, we think governments are going to be slow to open up the economy for public safety. Of consumers are going to have shifts in their behaviors and people will not be as anxious to drive and go to work if they can work from home. I still think there is downward pressure on the june contracts, even though this to selloff we had today, dipping well into negative territory, they have been a blip that was i believe due to something technical from one or two funds. Haidi right, so in terms of the reverberation we see across related industries, how much of that fallout would you expect to see even that we have already had about a third shut down already. Is the more structured on the supply side to come . Yes, i think the oil market will be forced into a state of rebalance. We talk a lot about these historic opec cuts. And we are talking about a potential for the u. S. To impose tariffs on foreign oil. And all sorts of metrics. Really what will cause the market to get into balance that will have to happen, is the Market Driven cuts. Those cuts are going to come from producers that are going to see that prices are uneconomic to drill at. Not only that, also that they do not have buyers and do not have any place to put the oil. General are in loath to shut wells, it is value destructive to do it and it is expensive and causes permanent damage to the wells and in some cases they cannot reopen those wells. But, eventually, that will happen in sufficient quantity, we think, up to throw me into 5 Million Barrels per day so the market will balance ultimately when the economy opens after covid19. Wti finallye seeing trading above zero dollars per barrel after that epic collapse we saw in the u. S. Trading session around 2. 20 per barrel. Given what is happening in the industry now, we have also seen the Federal Reserve sort of backstopping highyield credit. What does this mean for Energy Companies . Two they have more leeway cushion to keep going when things get this bad . It definitely is a cushion. There is a lot of debt coming due in 2022. In 2020 and 2021 there is not that much. Theres a couple of first lien loans. I think the counterparties to those might be flexible and a renegotiation process. Ultimately we think there will be more bankruptcies and possibly some highprofile ones. But i do not think it will be the spate of bankruptcies that some bears in the industry are suggesting. Ultimately there will be more consolidations. Right now, any potential buyers are reluctant to make acquisitions because they do not want to take on the debt. So i think they will wait to see flexion and oil prices until we get to the other side and they start make corporate purchases. When prices go negative and this is a historical moment, what does this mean for the industry . Youre talking about perhaps consolidation. But as you said people do not want to make deals. What sort of paradigm shift could we see from this event . Event willthink this have psychological ramifications. And investors will remember it. For right now it is mainly a paper loss. As you said, a fund or two, probably will do well. As a result of getting caught today. We think that as producers have to shut wells there will be bleed through into other sectors. So even though energy is a small percentage equitywise, of the broader u. S. Market, it is still a big contributor to u. S. Gdp and to employment. We think Lower Oil Prices in the u. S. , particularly at these distressed levels, can be harmful to u. S. Gdp, which, in turn, could be harmful to global gdp, which, in term, could be harmful for Oil Demand Recovery in the longterm. So i think that for the next while there could be severe distress on this sector. We also after memory that as there is no new investment in oil right now, we have to remember that as there is no new investment in oil right now, we are selling the seeds for a much higher prices in the future when demand recovers most investments reserve, is going to not to rebuild supply. As we shut wells and potentially some wells do not come back online, we really will have a situation where we could at some point, whether it is five years or seven years from now, have much higher prices. Until then, there could be a lot of distress in the industry. And plea through into other sectors. Nasdaq of energy and utilities, thank you. The next hour we will be joined by a senior commodity strategist f ge a little after that. Still ahead, while millions of china mobile users cancel subscriptions in the first quarter, the company could gain as more switch to 5g in the longer term. Up next, there is good value and upside in asia says e spring investment and we will get more on her Market Outlook ahead. This is bloomberg. You are watching daybreak asia, im Karina Mitchell with your first word headlines. The word Health Organization is warning against optimism saying the worst it may be yet to come. Spoke astor general countries around the world begin to discuss how and when to reopen their commodities their economies. He says the crisis is not over and the worst maybe ahead, sang many politicians and advisors do not understand the nature and the danger of covid19. The worst is yet ahead of us. Let us prevent this tragedy. It is a virus that many people still do not understand. Countries, very developed, putting their own conclusions because they did not know it got into trouble. Deaths in that u. S. Buyers hotspot in new york state were the lowest on monday since the start of the month, showing a sixth straight deli decline. Governor andrew cuomo six straight daily decline. Governor cuomo says the peak may have passed. Dr. Anthony fauci is warning people against protesting against the locked out and that reopening the u. S. Economy too soon may cause more serious harm. U. K. Government is resisting pressure to ease its virus lockdown fearing a second wave of the pandemic. Boris johnson discussed the manner senior ministers the matter urging caution. It has brought that u. K. Economy to a near halt triggering a surge in layoffs and applications for welfare. The u. K. Extend the shut down for three weeks saying the infection is approaching its peak. List e saugus high singapore saw its highest daily number it with 1400 infections driven by illness among Migrant Workers and dumber tories. Testinga is imposing and tighter social restrictions as infections quadrupled since the start of april. The indonesian death toll is the highest in asia outside china. Global news 24 hours a day on air and at quicktake by bloomberg. Than 2700 more journalists and analysts in more than 120 countries. I am Karina Mitchell. This is bloomberg. Shery lets get the latest numbers out of china on coronavirus cases. We are hearing there have been 11 additional coronavirus cases on april 20. Four out of 11 have been imported. Asymptomatic cases and no con virus just when it comes to china. Coronavirus deaths. Lets get a quick check of the markets now. We are seeing broad downside for markets, the nikkei losing 1 . A narrow range of trading for the japanese yen. The oil collapse we saw overnight in the United States play into the markets. The kospi is down 1 . We have dismal export numbers out of south korea for the month of april. The first 20 days of exports falling 26. 9 year on year. It comes to the asx 200, down. 4 . Has collapsedlia as Airlines Call in administrators. Analysis more market with our eastspring client portfolio manager, sarah great to have you with us. We continue to see oil under pressure. In this trading session we are seeing a let up and paring back some of those earlier declines. Given that most Asian Countries are net oil importers, what sort of impact and ramification of impact and ramification will this have for asian markets . It is an interesting we haven, not something seen before in terms of negative asset prices. Companiesdel eastspring at an factor in the oil price, a lot of businesses we out can make money at 30 oil. But at 17 oil things become trickier. Investors need to be careful. The outlook is challenged, no doubt. It looked like supply and demand should rebalance. Within the next few weeks. We should have more of a balanced situation. But investors need to be cautious on the oil front. Given that door so many more opportunities out there, maybe better prices were kleins can put money to work. Given that there are so many other opportunities where clients can put money to work. Shery and what does that entail . What has been highlighted through this selloff and with covid19 is interesting opportunities in the consumer space and in the property space. While the market sold off across the board, though sub in the two areas we have been rotating our portfolios and taking advantage of the opportunities. We think property is the ultimate play on the consumer, in fact. The demand for property in the growth of megacities in asia and investment in infrastructure are still important themes for investment in the region. Sure, there are challenges in terms of reach and funding and liquidity, and dividend sustain ability, but that is what we do. We do the hard work to understand which copies are viable and which are sustainable, and which have the best Balance Sheets to whether this tough patch. Which companies are viable. Billionhe treasury 2. 9 dollars in initial payments to airlines. Australiavirgin collapsing and australia, what are the prospects in this sector taking the brunt of this coronavirus pandemic . Impact . If you can hear me right now, what are your thoughts on the Airline Industry . The Airline Industry is interesting. They are at the pointy edge of the hole covid19 selloff, the whole travel and tourism spaces when we are looking at. There opportunities to go for quality but we have been looking around in the airline space. There are opportunities to go for the winners and to go for quality so we have been poking around in the airline space. I cannotere are mention specific names but there are some names stronger than others and some markets that have recovered more quickly than others. But i think investors need to be careful. It is not something that you can jump into. It really requires a lot of understanding. It is quite complex to understand the relationship between effort airlines, hedges on oil, the travel situation is uncertain. I think there is opportunity. At eastspring we are looking at that space and looking to pick out the best ideas. Shery thank you very much for your time today. Clientsng investment portfolio manager. Coming up next, as on a plummet by hong kong surges, fitch downgrades the city rating. This is bloomberg. Shery breaking here in the United States. Treasury saying it finalized agreements with major u. S. Airlines, saying it made 2. 9 billion in initial payments to the Airline Industry. We have seen tension between airlines and the treasury department, with treasury asking for more strict conditions for. Hese payments we have to train dollars in credit virus stimulus, 58 in coronavirus stimulus and 58 billion for the aviation industry, 40 million will go to 48 billion to find payroll cost through september. In hong kong the on employment rate has risen was no rest by insight. Unresturn of political could add to it. We are joined by our chief north Asian Correspondent stephen engle. How bad is a plummet in hong kong how that is unemployment in hong kong . Has relatively few cases of coronavirus, just 1000 cases and four deaths. On top of seven months of protests and that u. S. China trade work, the jobs picture in hong kong is fairly bleak. We have the headline number of 4. 2 which is more than the consensus estimate we expect from march of 4 . But the outlook is more grim. Number economics saying the jobless rate could hit 5 by midyear. That, by their own estimation is an optimistic outlook. In the months following the peak of the sars outbreak in 2003, in june of that year, we had 8. 5 unemployment and that is where we are getting some of these subsectors in that range. Construction on a plummet reaching 8. 5 in march. Construction unemployment reaching it. 5 in march. 8. 5 in march. Food and beverage with social distancing rules, that on a plummet rate has risen to 8. 6 . That Unemployment Rate. The trade and Logistics Sector makes up 18. 6 of hong kongs jobs at their Unemployment Rate is higher. Konge fit downgrading hong as an issuer of longterm foreign currency rating. So the city is facing a second shock after the. Of social unrest last year. We saw protesters arrested over the weekend. What is the mood like right now when it comes to potentially more protest after the app break is over . One concern the society has is there could be an escalation after a relatively quiet time. Coronavirus and social distancing it could resurrect as hong kong opens up. September is expected to see the Legislative Council elections. There must be concerned in beijing that the opposition pat democrats could soundly beat the pope establishment candidates the proestablishment candidates as they did last fall where they want 85 of those seats. We have seen harder line appointment by beijing to both the local Liaison Office and the Hong Kongmacao affairs office. We have seen that recent shopper edicts coming from both of those offices. Sharper it expert saturday had the arrest of 15 prodemocracy advocates, perhaps to send a message. Edicts comingper from both those offices. We approach anniversaries of last years protests. Chief north Asian Correspondent, thank you. Breaking news, Singapore Police have opened an investigation into the Distressed Oil trader. Inconcealed 800 million losses from futures trading. It also sold some of that Million Barrels of Refined Products it used as collateral according to people familiar with the matter. Now we are hearing the Singapore Police has opened an leong,igation into hin and the concealment of losses from futures trading could potentially mean huge losses for the banks that provided this trader with billions of dollars in loans. This firm has filed for protection from creditors friday. Repay as struggle to much as 4 billion. Coming up, the specter of deflation looms over the worlds Central Banks after oil to start plunged. We take a closer look at the challenges, next. This is bloomberg. Nobody has ever heard of negative oil before but it is very shortterm. We probably will not see this again in my lifetime that is a reflection of how oversupplied the market is, how weak demand is, and how tight this trump structure has gotten. You could see next year at some point it start to come into balance. Going forward north american production is going to be structurally impaired. It is a perfect storm for the Oil Producers out there. You are seeing that reflect in the prices today. And oil patch in this much trouble is not good for the u. S. Economy. Everyone is going to be looking at june and taking signals from what is happening to demand. Whether that demand is recovering. If it is not, june could very well end up following may. Shery some of our guests speaking about the outlook for oil. Let get a look at futures trading. Sophie take a look at oil markets. Brent swinging this morning. The benchmark monday. Rebounding after punching 40 below zero overnight. Active june contracts staying above 21 per barrel after markets wait on a policy response. Shoulding whether states impose production caps and President Trump says he will look into eight saudi oil import ban as well as filling up strategic reserves. Lets look at haven place. Gold resuming losses, trading below 1690 but trading of the highs of the air and Treasuries Holding Steady your the alltime lows. The dollar edging higher. 2020 already the best year of the greenback since 2015. And the yen. We are seeing in equities a downside for stock indices, the nikkei 225 down by more than 1 . The kospi getting dismal export data which could send a shock when it comes to global trade. We have stocks in sydney under pressure, off by. 6 . E miniseeing s p gaining ground this morning. Unprecedented drop below zero is ringing alarm bells for what could be a global central bankers worst nightmare, deflation part deflation. Our Global Economics and policy editor, Kathleen Hays is here. Oil, what else could signal deflation to come . Subzero oil if it continues and we probably do get a rebound here, factors special to the west texas intermediate contract. Use the oil below zero and you will raise the question. In the u. S. The key inflation gauge at the Federal Reserve 1. 8 is rising at yearoveryear close to the 2 target. Worried about a drop in inflation expectations. You see inflation breakevens. White years describe white line is inflation rick even. Blue connaught breakeven. Yellow, the tenure breakeven. It is just under 1 a year ago it was nearly 2 . Yellow, the 10year breakeven. It went below zero and this is the kind of thing that worries the fed. Has beenal reserve asked this question many times. Many fed officials on Bloomberg Television and radio say we are not worried about inflation. We are worried about something else, which is what jay powell, the terror of the Federal Reserve said on april 9 when he was interviewed at the the chair of the Federal Reserve set april 9 of the brookings institution. Globally inflation below target. It is not a first order concern for us today. That too high inflation might be coming our way in the near term. Far from it. Kathleen far from it indeed. Inflation expectations are falling and people do not expect the inflation gauge will get to 2 . It will start going any other direction and this is the kind of thing that could create an expectation that concerns the fed. The vice terra at the Federal Reserve was asked about this on Bloomberg Television april 13. The vice chair printing he said he is not worried about inflation and when asked about deflation he said the fed has the tools to fight it. Some would say the tools have been used lightly and how much to have left. Shery is that why bears are thinking deflation could be a bigger threat than in the past besides a drop in oil prices . Kathleen certainly the impact of coronavirus which has hit manhart. If you have a bloomberg which it demand hard. If you have a bloomberg terminal, go to quicktake. Deflation fueled the great to flesh and of the 1930s at japans lost decade of the 1990s. Stagnating, people stops betting money. The governor kuroda of the bank into by actions audit when he was elected Prime Minister as doj continues to fight and get away from zero closer to their 2 target. With jason emails schenker, the president of Prestige Economics and oil is one of his specialty specialties. He said mandated Energy Demand destruction is generally airy deflationary. Mandated energy destruction, we had to lock down china and have seen lockdowns around the world, that destroys demand and has put this down the pressure on prices. Shery Kathleen Hays, thank you very much, our Global Economics and policy editor. The Trump Administration reviewing a range of stimulus plans for the s economy as protesters in several states call for lifting a lockdown. Larry kudlow spoke to us exclusively on measures under review. The rules werenk bad to begin with. There might have been some glitches here and there. Secretary mission has done a terrific job treasury secretary venetian has done a terrific job. I guess nothing is perfect in life. Mnuchin. At judging how fast three had 50 billion went out the door, went out the window, i think it is a good program. Dollarys oution the window. Up ins being stepped terms of main street letting facilities and there will be assistance to large Important Companies that have hardships. Obviously the airlines are one of them. Look, i think it is a pretty solid program. There are always tweaks here and there. But the fact that it was drained so quickly is testament to its efficiency. Those points it acted much quicker than i thought it would. I thought there would be money troubles getting money out the door. But if eight one billion dollarys company can get access to the Paycheck Protection Program designed for Small Companies we have a problem. I think we can concede that we need to make tweaks. Is that part of the agreement . Things up, thek likes of shake shot, the one billiondollar Company Listed is not get shake shack, is not get access to those funds for Small Business as . Small businesses . Thatok, im not followed shake shack story. Apparently there were issues there and they may be able to seek financing through the Federal Reserve loan facilities and i do not want to go there. There will always be tweaks and we are trying to do this as expeditiously as we can and look, the whole point is and we have talked about this and i will repeat it, we want to stabilize and put enough cash and enough liquidity into the economy, to get us to the next couple of weeks. . All right . . That is the whole purpose of s Small Businesses of this Small Businesses. And those who work for Small Businesses. The unappointed nubbers are very bad. Theres some evidence that may be slightly less bad. Numbers areloyment very bad. If we can get to the next couple of weeks, and as you know, the administration help scientists have given the governors good guidance and roadmaps for reopening and status. Then mate may be a transition month into a better economy moving out into the summer. Where, hopefully, the contraction will give weight to some Economic Growth. We are trying to set the stage for that and keep folks going. You know, with the direct treasury checks. At the deferral of the peril tax. What the deferral of with the deferral of the payroll tax. With the deferral of Student Loans and income tax. I think in a short time i have to your credit. The operating agency has done a good job. Lets move onto tariffs and trade, showing . A latest announcement overnight will be deferring payments of tariffs of some goods. Can you give us clarity there on the purpose of that latest move overnight . What have you done and why are you doing it . On the socalled mf and most favored nations, where there are hardship cases, jonathan, we will suspend tariffs for a few months, i think three months. Mfn. We are not rolling back three a ones or china tariffs or to 32s or other trade deals. Duty,e cases the customs the excise tax you pay on , ifrts, will be lifted there are hardship cases. In particular there is a lot of andern about retailers related supply chains getting into the nonstates. It is a significant action. We want to help folks. As a way of putting out certain industries. It is not a norm is action. And it does not change the president s own trade policies. It is not an enormous action. But we are suspending and deferring as we had elsewhere in our recovery plan. We have mark when it comes to the u. S. Stimulus package breaking now, House Speaker nancy pelosi sank they may be able to get an emergency stimulus package deal on that funding tonight. That the democrats and administration have come to terms on the printable most of the legislation and they have 120 billion dollars for Small Business dollars Small Businesses in the package. It could be worth as much as 500 billion Speaker Pelosi saying there could be 120 blaine dollars for small this is this in the package. 120 billion dollarys for Small Businesses as we know that Small Business loan funds have run out of funding. Haidi potentially and we would see some upside for market. We are seeing a downside there when it comes to trading despite if you can call it that a recovery in prices of crude to just zero dollars a barrel after , for theo 37 negative first time this historic technical blip if you well, heralding tough times for the Energy Sector. Asare also watching aviation one entered voluntary administration, the collapse of one of two airlines in australia sending qantas shares higher. We continue to watch for the reaction when it comes to markets not being helped by that plunge in korean 20 to exports. This is bloomberg. This is bloomberg daybreak asia. First word headlines. All recovered though west texas futures fell into negative territory for the first time on record. 23e for may delivery rose to 14 per barrel having earlier sung to as low as 40. The quanta virus has brought the Global Economy the coronavirus has brought the Global Economy to a halt with so much Oil Available that there is no room to start and no one wanting a contract that is about to come due. Daimler resuming work at an engine plant that had been shut down for one month. Germany has had 146,000 infections. France had you just link to the virus making it forth country to record more than what he thousand tallies behind only italy, spain and the United States. Unappointed in Hong Kong Rose for a sixmonth adding the highest level since october 2010. The total figure for people and work slumped by 3. 6 extending the longest stretch of rises since the aftermath of the financial crisis. The coronavirus and months of antibeijing protests that economy with the labor force tricky by 2 . In the city the labor force shrinking by 2 . Will hanh is rejecting any role in spreading the infection around the world amid speculation in the u. S. And elsewhere. Disease laboratory tonight the virus escaped by mistake or was liberally released. Telling the china state meet at that the patient your had no contact with staff. Global news 24 hours a day on air and at quicktake by bloomberg. Than 2700 more journalists and analysts in more than 120 countries. I am carita mitchell. This is bloomberg. I am carita mitchell. This is bloomberg. Says tradenext guest is no longer reliable but Asset Investment to be an option and chinese diplomacy can do better in having the coronavirus. Haidi joining us from the London School of economics, a fellow. Does this significantly and permanent late change or we can the Economic Situation in china as well as the countries level ambitions . That countrys global ambitions . Good morning. The chinese Economic Growth engine has been crippled. We thought success and investment was down 60. 9 , retail down 50. 8 down. 16. 9 . 15. 8 . Trade supporting chinas q1 gdp to a slight print without trade i think you could have [indiscernible] it be weaker. [indiscernible] trade most unreliable Economic Growth for china in 20 and Going Forward. Not a live because of the u. S. China trade war but because of the transformation of the chinese Economic Growth model. It is over and will not return. [indiscernible] tosumption contributed chinas Economic Growth in 2019 and will be the driver Going Forward but it happens to be the hardest hit. Basis the shortterm economy in 2020 in a massive way, youre correct china needs to invest heavily in infrastructure spending. [indiscernible] provincesmises the latest data showing governments let investor, 5 trillion u. S. Dollars, 34 trillion are indeed to be sent over the next 510 years. 34 trillion of research and development to be spent over the next five years to 10 years. [indiscernible] china is reporting economic thats deshaernor governments extension will be crucial for crating Job Opportunities and economic recovery. To think this is back to the old playbook of success at investment . The great rolling ball of debt in beijing . What does it mean for financial reforms and restructuring agenda . Well, as you saw, haidi, the planning body tabled a new Infrastructure Investment plan which i compare to franklin to roosevelts new deal in the 1940s. It is called the new infra Structure Plan because it has a digital twist. In a way it is infrastructure but it is something throughout has never seen before. China would invest in networks all over the country, data centers, smart cities, fiberoptics, the internet of things. And it helps china with its economic recovery and in ,chieving its ambitions in 2030 as a global ai leader. [indiscernible] this could usher in another decade of Economic Opportunity for china. Because of fundamental technological shifts. Currently using this crisis as an opportunity. [indiscernible] longterm, will recover from covid19. The world has seen 60 million 1918 has seen 69 People Killed in 1918, but poste crisis well beat be the economic impetus that will set the Global Economic on fire again . We continue to see tensions between china and the u. S. I spoke to the president of the Eurasia Group earlier who warns about the potential fallout of these tensions. We are going to seek more decoupling of the u. S. And chinese economies that was happening before coronavirus and the technology space, google, amazon could not get into china and we were not letting why ncc and the United States telling our allies not to come out. Zte. Awei and that will go further in medical supplies and personal protective equipment but more broadly than that. And if the two sites should not meet each other without interdependence, the potential of a fight ask leading is greater. Fight potential of a escalating is greater. Haidi what is the risk if we continue to see this decoupling . Day think covering news all we continue to see the decoupling starting from last year. It is becoming escalated from trade areas to investment and certainly to technology and potentially capital and human mobility. [indiscernible] during covid19 taiwan has u. S. E a centerpiece of the china potential geopolitical strategic complex. Taiwan has more Prominent International voice and away during the covid19 crisis. The u. S. Has recently given taiwan some levels of attention formally and informally. China perhaps is increasingly more uncomfortable with it. Chinaslationship relationship with taiwan has been one china. The escalation of tensions over taiwan has become more evident in the recent weeks. As kissinger said, [indiscernible] and so far we do not see that policy coronation between china and the u. S. , the worlds two largest economies. Certainly not on the taiwan issue. For china taiwan is not a negotiable subject on the table forthat only these a chance strategic miscalculations about size. [indiscernible] haidi thank you for your insight, London School of economics visiting fellow. More to come. This is bloomberg. Haidi take a look at how oil stocks across asia are trading at the moment. This as we saw the collapse of oil prices in the u. S. Energymsci asia pacific sector the worstperforming year to date down 30 . This as we see oil recovering some of those losses but still wti trading around one dollar per barrel. The worlds most profitable distiller reports earnings later. Our markets coag or has a preview. It will be full year 2019 so will be back were looking at it will return to the magnitude of the cells recovery from hibor onward as chinese cities from february onward as chinese cities resume operation. , 2019 rosy projections revenue rose 50 missing anil dust 50 missing analyst , missing rose 15 analysts estimate and set a more modest goal for 10 in 2020. Sentiment in china may be weakening even before the coronavirus outbreak. It will be interesting to watch if the company benefited from pentup demand or if sentiment is still looking depressed in china right now. If you take a look at retail sales in china in march, we did see that slight improvement from the collapse in january and february. But look at tobacco and liquor sales in those gray bars and we see doubledigit drops. In february and march. So the company may have also faced logistical bottlenecks during that time. Investors are not seeing past that for now. The consumption trade is coming back in a big way and this has been one of those place. And another the latest to raise its price target to 1500 for the stock to jesse 822 upside from current levels. Suggesting a 22 upside. Liquor, a preview of earnings. Other interviews with bloomberg later today cleaning blackrocks vice chairman, cocacolas the fo and the president of the uns general assembly. This is bloomberg. You doing okay . Yeah. This moving thing never gets any easier. Well, xfinity makes moving super easy. I can transfer my internet and tv service in about a minute. Wow, that is easy. Almost as easy as having those guys help you move. We are those guys. Thats you . The truck adds 10 pounds. In the arms. Okay. Transfer your Service Online in a few easy steps. Now thats simple, easy, awesome. Transfer your service in minutes, making moving with xfinity a breeze. Visit xfinity. Com moving today. 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