Global virus infections tops 2. 5 million with more than 175,000 deaths. U. S. Cases climbed 5 . Their biggest increase since april 10. Its get you started when it comes to the state of trading in asia. We are setting up for this wednesdays session. Sophie kamaruddin in hong kong for us. Sophie we are seeing mckay futures edge slightly higher with s p eminis expecting more eruptions in the region after asia was led lower by india on tuesday. Earnings adding to that drag. The yen just Holding Steady in the face of a stronger dollar, which is trading at a twoweek high and gold just resuming gains with spot prices up 11 this year and bank of america is bullish on bullion, raising its cold 18 month target to 3000 an ounce. Moving onto oil now, wti for june back above 13 a barrel after slipping below 10 in the new york session, which was pricing weakness in the front month contract. They are allowing for negative options to be lifted from april 22. We are seeing the Oil Forward Curve shifting amid the disconnect we are seeing with the fiscal market. Shery. Shery lets turn to the u. S. Markets because stocks are now more costly than they were when the bull market ended two months ago. That is the earnings outlook, if it is any guide. The ratio hit 19 in february. 19. 7 on friday. This despite profit estimates that we are 18 lower. Joining us to discuss is a portfolio manager, michael. Always great having you with us. It is the equity market here in the u. S. Overvalued . Michael good morning. Thank you for having me. It depends on your perspective. I think when you look at the uncertainties out there, you can definitely say it is overvalued or at least richly price given expected earnings. The only caveat i would say is there is no way you can predict earnings right now. If you are trying to value stocks based on discounted cash flows going out, it is hard to do, virtually impossible, until we have more visibility with respect to how the world comes out of the coronavirus on the other site so you are really buying stocks on the others for the future on the expectation that the u. S. Economy, the global economy, will improve, and you want to get in early, and you are patient, so then, it becomes a company by company situation. Im stocks have come back substantially since the midmarch lows. Others, not quite so much. You are trying to base it on pure earnings right now, but if you are looking for a broader, longerterm trade, maybe not depending on the industry and the companies. Shery is this why we saw a really little reaction when it came to the oil crash just yesterday . We finally have seen oil stocks and stocks in general, not to mention treasuries, now show some of that riskoff sentiment that an oil crash of this magnitude would just normally provide. So our markets finally catching up to the magnitude of what is happening in the oil industry . Michael well, i mean, stocks are down 1200 points in the last two days. They certainly reacted. Whether it was the issues in the oil market or just sort of a valuation where people say, ok, we are heading into earnings season, earnings are unpredictable, some of them will be negative, i dont know. Stocks went down because more people sold then bought, but there is no question that oil did have in impact. It was such a shock, the decline in price for the may contract was such a shock that i think it through the markets threw the markets for a loop. You do wonder whether there is some sort of issue we are going to learn about down the road, marching call, or someone having to raise liquidity. Someone mentioned the u. S. Oil fund as being a possible culprit. We will find out in due time. Nobody should be really surprised by the decline in oil because we have had demand destruction globally. We have shut the u. S. Economy down, not to mention most of the rest of the world. People are driving. Businesses are not running. The demand for oil will be much lower. It keeps getting produced and it needs to be stored somewhere. So storage issues in the United States on wti are another reason that was speculated as to why it fell so much. People who had to deliver on futures contracts and would rather pay somebody to take the oil off their hands and except delivery. Theres a lot of issues at play, but it all goes back to demand and the inactivity in global economy. Energy was one of the sectors you have been selectively adding positions to over the last couple of months. I am wondering if that is still the case now. Would you be staying away from that until there is greater certainty either on the supply side or the demand and the economic reopening side . Stocks we have energy selectively throughout this process. We did not do anything today. I cannot speak to the future. Know, looking at, you larger Capitalization Companies with good Balance Sheets, that you know, potentially will ride ofs out then be acquirers assets that weaker Balance Sheets will not be able to sustain, and longterm investors, we generally think three years to five years out. We are looking at a recovery in oil at some point down the road faced on economies eventually getting that to production growth, and therefore, the need for energy will be greater. I think you have to have a strong stomach for that. We are looking at companies to pay dividends. Recognizing that dividends may be at risk in some places but the stronger the Balance Sheet, the more likely that company survives, the more light lead likely they have flexibility to buy other assets if weaker Balance Sheets cannot be sustained. One thing that is interesting about energy and other commodities and Natural Resources is the assets are generally in the ground. The deck chairs move around as to who owns them depending on capital structures, but the assets are on the ground, and if you on the right companies that can own the assets over the long term, you generally do pretty well. On that theory, and again, looking not right now but as we come out of this issue in the longerterm, energy is attractive here. What do you think evaluations right now . We are not exactly talking about a market that is particularly objectively cheap, right . Michael correct. And valuations, i do not. I do not think we are in an environment that you have enough to do reasonable price discovery. And so, it is because we are in such kind of a bizarre time right now, and so, you know, trying to value stocks based on earnings while most of the economies are shut down is just really hard to do, and a lot of companies are pulling guidance, pulling outlooks, etc. , while providing large ranges. You really cannot rely on them. If you are an equity buyer, you are buying the other side of this when we come out, buying a resumption of growth, buying the belief that you are going to rebound substantially, that you have a longterm focus and a strong stomach to ride the volatility that has occurred and likely will continue to occur going forward. If you cannot do that, you need to be in something more conservative. The environment, given uncertainties everywhere, among various asset classes, there is no better time to be diversified among a broad base of different assets. Stocks will be included, but also strong Balance Sheet, fixed income, low duration fixed income. Basically gold and silver as well. Bank of america came out with the big gold call today which got a lot of attention but if you look at the amount of liquidity that has been created and the fact that a lot of that liquidity is getting onto main street with probably a big multiplier down the road, it is not unreasonable to have issues down the road, and therefore, a gold call like that looks big right now, but down the road, could be something that is more reasonable. You definitely want to have some gold for an alternative currency for uncertainty and against the devaluation of fiat currencies. Diversification makes sense for a lot of reasons here. If you cannot ride the equity stomach, the stomach to ride the equity market on their own. Because we have so many uncertainties, probably a weight to minimize the risk of loss and put yourself in a diversified portfolio would make sense. Haidi michael, great to have you. President with, us. Coming up next, immigration is on pause for 60 days according to President Trump. This as some states continue to look at using various restrictions while the number of cases in the u. S. Continue to climb. Still ahead, the World Food Programs David Beasley joins us to discuss how starvation could be a bigger risk than the coronavirus itself if Economic Hardship spreads. This is bloomberg. G. You are watching daybreak asia. I am Karina Mitchell with the first word headlines. The number of Coronavirus Infections around the world has topped 2. 5 million with more than 170,000 people now dead. However, the recovery rate in italy has almost surpassed the number of new cases for the first time, and germany reported the smallest new infections this month with but the worldfamous oktoberfest has been canceled for the First Time Since world war ii. Approach to stopping transmission. [indiscernible] at least until vaccine or very effective treatment is found. Process will need to become our new normal. Karina European Union leaders open a Virtual Summit this week armed with no clear instructions on how to finance the viruss fund and no specific details on how it will operate. The Video Conference will discuss a roadmap for tapping contains no but it vision for the investment needed to stem the fallout. No concrete decisions are expected on thursday. Singapore is now extending its virus knocked down for a month after a surge in infections. There are more than 1100 positive cases on tuesday, taking the total about 9000. In indonesia, it is banning travel for the festival amid reports that many people are planning trips irrespective of the virus. Infections in indonesia have quadrupled this month with a peak seen coming at the end of may. 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 u. S. Senate has passed nearly 500 billion dollars in new pandemic relief funds to bolster aid for Small Businesses, pay for coronavirus testing, and help hospitals daily used by sick de luged by sick patients. 30 million workers. There will be a lot more. We look forward to this having a big impact on the economy. We can always we consider that. This is a lot of money. Governmentbloomberg reporter, emily, has the latest. What do we know about this latest package, and this is the third bigticket item, and we are expecting more to come. Emily yes, absolutely. So this package in particular focuses a lot on the paycheck protection program, focuses on making sure that Small Businesses have enough money to make sure that they are not laying off employees, contributing to the high unemployment rates we are currently seeing. That is what you are seeing from the 484 billion, but you are also seeing money for hospitals, money that deals with the Research Behind vaccine. That is included as well. This upcoming fourth round, which is discussed, we are expecting that to look much bigger and perhaps it will have smaller things in it like we saw that 2. 2 trillion several weeks ago that had multiple types of ofding, broad swaths assistance for both americans and companies as well as simply changes to adjust to the new reality with the virus. Haidi we also heard the president talk through broadly this 60 day ban on immigration, the possibility of extension. He also spoke about working on a secondary immigration bill. Do we have any details . Trump quickly mentioned unclearre might be if it is an executive order or perhaps some sort of legislation he was trying to get through that might include additional immigration restrictions. The immigration restrictions would not include workers who are coming for specifically for labor jobs. It would include farmworkers impacted by this. We will see as things continue if he decides to have more regulations, if this is something certain republicans have been pushing for, including the former attorney general, jeff sessions. We will see where the second one goes and what the result of the first one is. We have seen a lot of codices and after Big Companies like shake shack asked for relief and aid. We heard from President Trump saying he is happy that shake shack actually decided to return the money. What do we know about how big corporations will be affected by this . Emily sure, so with this particular bill that has been cast, there is a strong need for oversight and a need to make sure it is the Small Businesses that are being taken care of. Momandpop stores might not to writeequity needed through this ride through this uncertainty. It makes sure to target smaller businesses, and we are going to see that the house take up that bill. We are expecting to see that on thursday morning at this point. Much, ournk you very Bloomberg Government reporter joining us from d. C. Back to the oil price meltdown. The former ceo of bp said demand for crude will take a long time to recover. Climate change and concerns like the virus will force a change in demand. Down inction will come the states. New production is not added. Demand i think, very sluggish indeed, will take a long time to recover. Obviously, it is down very heavily at the moment, about 30 . It will come back, i think, slowly, as people will be very to they have been consuming. The behavior of people is changed as a result of the virus. No doubt. I would not be surprised if you look at oil prices being much lower for longer. You brought up opecplus. There is conversation they will move their cuts forward, maybe even take it deeper. Of oil aon barrels day. Saudi arabia is not going to go below that. Maybe that could happen. While anything like that help price support even more . I think you really have to dent production a lot to support the price, but in the end, that is not sustainable. Saw in exactly what we 1985 to 1986, when the cuts were not sustainable. Price of oil stayed loafers 17 years thereafter. There is a lot of oil. The growth of demand. I cannot see this growing very steeply for a very long time. I think all of these are temperate things. Yeah. Could you help me understand the roadmap to stronger demand . Two gasoline inventories need to calm down and then refining margins improved, and then we soak up some of the oil in the market . When we talk about recovery, what is the actual process of that . It is just that. First, it is underlined demand for economic activity. Bear in mind that the rate of growth in gdp determines the rate of growth of oil very slowly. We are getting more and more efficient at using oil every year. We use 1. 5 percent less oil for every increase in gdp, so gdp has to, inventories have to be consumed, and people really want consumeme want to oil, so aviation, transportation , industry, a variety of things like that. I do think, however, there is a much bigger overlay on this today, and that is peoples great concern about climate and the use of hydrocarbons, which methane and Carbon Dioxide into the atmosphere and increase Global Climate change. I believe this is something that will carry on, and in terms of behavior, i do think people are beginning to reflect on viruses creating health problems, creating lung problems, and on secondly, natural phenomena like viruses coming to do things which are far more powerful than president s or prime ministers can do to human beings. Climate change will be one of those things, so it would not surprise me that over the period we are talking about now, the mediumterm, that Climate Change will remain a very important damper on the consumption of crude oil. That was the former bp ceo, john brown,e speaking exclusively to us at bloomberg. Speaking exclusively to us at bloomberg. You can read more about the oil meltdown. Go to dayb on your terminals and it is right there on the mobile in the bloomberg anywhere app. This is bloomberg. Shery lets get a quick check of the latest business flash headlines. Net flax added nearly twice as many new subscribers in the First Quarter than predicted with lockdown, cementing its place as the rare company to benefit from the coronavirus. Underx gained a fraction 16 million new users through march as people switched on to ride out the quarantine. The forecast was for 8. 5 million while netflix predicted 7 million. Snapchats parent is another to benefit from the virus. Daily users have soared and snap says it expects to keep growing as people try to stay connected during the pandemic and beyond. Snapchat says it reached 230 million daily users in the fourth quarter. Some 5 million more than the market was expecting. However, snap says it is too early to know if that will boost advertisers pullback. Epic games is said to have embarked on a new fundraising round that would value the company about 15 billion. The maker of fortnite and the house party app, have exploded in popularity during the pandemic. They hired a Financial Advisor and are said to be any for a cash injected of up to injection of up to 1 billion. Ons get you a quick check how markets are trading at the moment. We are seeing crude futures rebounding. June futures at the moment above 13 a barrel. This of course after seeing a plunge of as much as 70 of one point. Stocks higher while kiwi are under pressure. [no audio] coming up next, we are going to take a look at the Energy Outlook and oil policy with the former acting deputy secretary for the u. S. Department of energy. This as we continue to see whiplash in crude markets. This is bloomberg. Nowadays you do more from home than ever before. The xfinity my account app puts you in control with Digital Tools to give you the help you need when you need it. Get fast and easy answers with personalized help 24 hours a day, 7 days a week. Change your wifi password to a phrase thats easy to remember. Even troubleshoot your services on your own. Were working to make things a little easier for everyone. Download the xfinity my account app today. We are witnessing what happens when logistical constraints running out of inventories and the pipelines are full. It is a very acute concern all throughout the industry. 30 Million Barrels a day that the world is oversupplied right now. There is too much crude oil. It is a global problem. A lot more crude oil is on the way. Oil futures or ets. It can be completely wiped out. It is a dangerous marketing trading. In three weeks, you will have the same situation with june crude oil. Everybody knows that. That is the way it is developing here. I would not get too excited about it price recovery and need a price recovery anytime soon. Banksities and central prop up equities. If they try to prop up oil, it makes the matter worse and we go to negative prices. Some of our guests commenting on oils deepening collapse. Climb aboveg prices 13 a barrel after a painful two day selloff. June contracts expected to endure similar extreme moves. Treasury futures looking steady after the overnight rally that sent 10 year yields towards a record low reached in march and given that trend, Franklin Templetons michael ended his bet that yield will rise. Eminis fluctuating higher by. 1 and nikkei futures gaining ground, this after the worst day for asian stocks in a month on recession risks. Importers on oil were caught up in that selloff with stocks falling in japan, india, and china. Shery lets discuss what is happening in the oil market. Joining us is an adjunct professor and former secretary at the u. S. Department of energy. Thank you very much for joining us today, jeff. We have seen this huge crash in the oil markets, and now, the Trump Administration coming out and saying they are pledging oils to support the industry, especially when it comes to jobs. Will this help or hurt the industry given that perhaps we need the market to take care of this glut . Its good to be with you. I think the market is clearly playing the lead role in this and taking care of the glut that we have but there is certainly an appropriate role for the federal government to be engaged in the situation and to try to be helpful as long as they are pulling on the right policy strings and what i heard from the administration thus far, it looks like they are in terms of trying to bring some liquidity to the Energy Sector to make sure that companies have enough money to continue their production and then also to look at using this Strategic Petroleum reserve as a way to take some of the oil off the market. Shery what are some of the options that the administration has in its hands in order to support the oil markets . What do they mean by pledging funds to support the industry . Jeff theres two things. Broad funds have been pledged ander through congress direct appropriations or through the Federal Reserve in terms of making lending facilities oil and gasnd companies in the United States, like all companies, should be able to access that money to help with the costs that they are incurring during this time. What the government also has is a Strategic Petroleum reserve, over 700 Million Barrels per facility, spread out in the United States, as well as authorization to buy up to one billion barrels or to store one billion barrels of oil. What the administration is talking about is a number of things. One is to actually contract with the private sector, with oil, to allow them to store their oil in the Strategic Petroleum reserve. That will help with bottlenecks that we have all over the country as the commercial Oil Facilities filled up. And then the administration was also talking about actually purchasing oil from various suppliers and using that to refill the Strategic Petroleum reserve or to get up to that billion barrel authorized level that congress has allowed the administration to get to. Shery jeff, we have the Texas Railroad commission putting off a decision on whether to impose Oil Production quotas. What do you think of that decision and what do you think should be done on that front . Jeff it is an interesting issue because the question is how much did the governments get into the market to deal with the situation . Long time has been a since the Railroad Commission has even consider doing Something Like that and i think it is appropriate for them to look at. And then you have companies on both sides of the issue, some of the smaller companies, the independent companies, are saying that, look, this is unprecedented. It is appropriate for the Railroad Commission to impose some mandatory curtailments on suppliers in the state of texas. If anyone was going to go down that road, you would certainly want to coordinate it with other oilproducing states, so it is not only texas, but then you also have a lot of pushback from others who were saying, look, lets let the market handle this situation, and what we have clearly seen is that the market has been handling this situation. All sorts of announcements from producers that they are going to slow down investment or on their own decide not to produce, so we are seeing some of that, and we are also feeling that the Midstream Companies which take the oil that has been produced has beenthe oil that produced or sending notices out to the producers effectively telling them that they are going to have to curtail their production because those Midstream Companies are not going to have the capacity to take that supply, and so, the certainly dealing with the situation. Traders often say that the best low for low oil prices is oil prices, and that is what we are seeing here, but that is not to say that prices are not going to reverse any time soon. I think we will be in a low number for a long time. Just last year, President Trump was talking up this idea of American Energy dominance. Has that truly changed now and is this really the swift and we are seeing to the u. S. Shale revolution . Jeff now, people who say this is the death of u. S. Shale are greatly exaggerating what is actually going to happen, but i do think that you will see some sort of separation within the shale industry in the u. S. , but for those producers who are located in the best shale plays, with the best resources, and have strong Balance Sheets, they will come through this ok. Locatedothers who are in places that are lesser quality and have do not have quite as strong Balance Sheets, is going to be really difficult and we will see a lot of bankruptcies that will come around over the next few months, but it is clearly not the end of shale in the United States, and the United States remains an energy superpower, and it will continue to produce at fairly dramatic levels compared to where we have in the past for the foreseeable future even like, with all producers right now downturn. What would be, in your opinion, a levelheaded response to the situation right now, policy response . We know the temptations of this administration for this president would be to fall back on the tried and tested playbook of tariffs, for example. Jeff i think what i have described in terms of what they are doing, in terms of storage and making sure liquidity is available, are really the best ways to go about this. The idea of putting tariffs in place is something that i think does not make a lot of sense, first of all because, effectively, what is going to do is make it more difficult for refiners in the United States to use the oil that they are configured for. They are configured to take all different types of oil and that is the way they made their investments. Putting tariffs in place will raise their costs which is not something we necessarily want to do right now, and also, when you put in Something Like tariffs, you end up effectively putting a policy that will distort the market it is not clear when you will then remove the seen,s, and as we have the benefits of free trade over time, putting in place something that starts to hurt that free trade, and when there is no end in sight, it does not seem to make a lot of sense to me from a policy standpoint. What i would much prefer is we encourage other countries who also import a lot of oil, countries like china, south korea, that they import oil from the United States, and that we actually continue to try to expand the market for our oil rather than trying to close it up. Thank you so much for joining us. Former acting deputy secretary for the department of energy with us. Coming up next, a humanitarian catastrophe of biblical proportions ahead of the u. N. s World Food Program. A dire warning for World Leaders stemming from the coronavirus pandemic area David Beasley is along with us next. This is bloomberg. Karina this is daybreak asia. I am Karina Mitchell at the first word headlines. China is calling for a reset of relations with the u. S. Amid the coronavirus, saying the lack of transparency in washington is worrying. The ambassador told the new economy that beijing has shared all its notes about the infection. The u. S. Has doubted chinas openness about the virus but he said beijing has done its best to achieve trust. Meanwhile, a new bloomberg invey casino operators macau. They are expected to shoulder a 95 Profit Growth remains in the march quarter. All six operators are to report in the coming weeks. It would underscore the deep damage being inflicted by the virus and the subsequent restrictions on travel and entertainment. A tentative recovery in air travel in china is stuck at less than half precoronavirus levels with passengers continuing to shun leisure trips. Domestic flights operating each day in china compared with 80,000 before covid19 shut down travel. Air services resumed early last month but the number of mainland flights has stalled since then. The virusinduced economic slump rising investment losses. The bojs Financial System says if the downturn is prolonged, more companies could face solvency issues and higher credit costs. It also warned that Financial Markets and fx funding may become more unstable but said the economy remains resilient. 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. Fallout fromonomic the coronavirus pandemic is leading to a humanitarian catastrophe according to the head of the World Food Program. David beasley gave this stark warning to the Un Security Council earlier, highlighting an expected doubling of the number of people facing starvation globally. He joins us on the line from washington. David, great to have you with us. We are glad that you have fully recovered. We understand that you just suffered from covid19 yourself. Of course, we are about to have a very important conversation right now because that most vulnerable, the poorest in the world, not only unable to work because of global lockdowns, but also seeing food prices surging because of panic buying and supply chain disruptions. How bad could it be . David it could be bad, and it is bad already. We are already seeing the symptoms and the beginning of the spread in africa, which is going to be catastrophic. You have seen the disruptions in some of the most sophisticated supply chain countries in the world like the United States. If you imagine you have a problem there, what you will have in the most fragile environments, like in africa we came out with a report of last years severe food shortage or the severe Food Insecurity peopleple, 135 million literally marching towards the brink of starvation, and now, compound that with probate, we are looking at the possibility of 260 5 Million People marching toward the brink of starvation and this will be an absolute catastrophe. Are you proposing nations should do right now . David they have got a lot of things they have to do. Number one, you cannot pit the covid virus against the hungry. We have to keep supply chains going. We have to get the economy moving as fast as we possibly can. You have to give us the access to the funds we need, particularly in fragile environments, otherwise he will destabilization, migration by necessity, and the list of things that come with that. Shery haidi david, how much do Something Like that u. S. Policy me know President Trump does not necessarily like certain u. N. Bodies. He has withdrawn funding from the who. How much does that further into a further endanger the people you say are at risk . David the United States government, Trump Administration, republicans and democrats, seem to be fighting on everything. In terms of the World Food Program, our budget is going up to 3. 4 billion. There has been an extraordinary commitment. I am in washington today, meeting with leaders, talking with Senior Leaders on the hill as well as at the other end of pennsylvania avenue, talking about the implications and the impact of covid and you just cannot look at one perspective of covid. You have to see the complete picture and that is why we are trying to its claim to leaders that we have got to keep the supply chains going. We cannot in any way shut down the supply chain live border crossings, shutting down ports, distribution points, excise taxes, export bans, these types of things must not be allowed, so we can keep the supply of goods, and particularly of food. If people do not give food, they cannot live, and this is a very serious issue. The meetings i am having in washington, and the leaders let me say this very clearly. It has been remarkable with everyone facing these very serious issues, i have been talking with the leaders in germany, the u. K. , the e. U. , the United States, the list goes on. Every one of the leaders is committing to work with us, to help the poor, to help the needy, to stave off starvation, but they understand this is a complex time period. This is uncharted territory, and this is something the World Food Program we are work to used to working at hospital environments. We are providing a lot of guidance, a lot of advice, and not many will realize it. For example, with the airlines pretty much shut down in africa, we areld food program a logistics hub. There now supplying doctors, nurses, the passengers, as well as the cargo we have already put out in 78 countries millions of masks, millions of test kits, millions of ppe, to help keep things moving along, to save lives. We are a central part of this entire operation, so we are in this together, and we must not fit covid against starvation. We have to work through this together because literally, if we do not handle this right, we will have more people die from the Economic Impact of the breakdown and supply chains then you will some covid itself. We have to be shrewd and smart and savvy as we work through these complex issues in these uncharted territories. Throughout every aspect of this health crisis, we have learned that time is of the essence. We have learned from the who that response a Quick Response is perhaps better than the perfect response. I am wondering how much runway you guys have in terms of time to be able to deal with unforeseen or uncontrollable hurdles and circumstances that arise . David time is critical and we do not have a whole lot of time africa,ou know, in there are many fragile economies, fragile health care systems, a lot of issues. Qaeda, isis, boko haram, these type of unstable environments, and now, you are compounding, like in nigeria, which 90 of the economy is oil. 98 of their economy does oil, and oil prices are dropped to the bottom. Countries that are already very fragile, so time is very critical because the coronavirus covid is spreading in africa just like it did in the United States and the u. K. , china. The first couple of weeks were slow and then it takes an exponential jump and if we destroy supply chains and literally millions of jobs are nor, you cannot get food have a job, you are going to have some serious unrest and we are going to have truly famines like biblical proportions. Nothing like we have ever seen before. Shery we have already seen Meat Processing plants in the u. S. Shut down because workers got sick. We continue to see this covid19 spreading all around the world. Are you concerned about a direct impact on this Food Supply Chain because workers will be too sick to work . David yes, we are. We are working with leaders. In africa alone, we are pretty much in about every single country and we are working with the leaders. Many organizations during this are the for covid we emergency operation, just like ebola. We are the containment mechanism. This is where we do our best work. 97 of our people out in the field are still on the ground, working with leaders to make certain that these supply chains do not break down. Working with the leaders and working through the different scenarios that are developing literally on an hour to hour basis all throughout africa and around the world. [no audio] is the World Food Program executive director, David Beasley. Thank you so much for joining us. Big guests onese bloomberg tv later on, including the ceo. This is bloomberg. Shery lets get a quick check of the latest business flash headlines. United airlines is seeking more than 1 billion, stepping up efforts to boost capital amid the virusinduced collapse in air travel. The offering is expected to price before the new before new york opens on wednesday. A discount of 7 on tuesdays close. The sale is the first from a major u. S. Airline in the pandemic and comes as the government taps in with federal support. Is examining a request by shareholders to seek 100 million in damages over a payoff scandal involving a former official. Five investors want criminal charges against 19 present and former auditors and directors. Local officials were found to have received cash and gift in return for contracts at the utilities nuclear plant. Technology company is emerging as the big winner in the race to build 5g in china. Despite being blacklisted by the u. S. , huawei has secured more than 4 billion of equipment orders from china mobile, beating out rivals such as zte and erickson. Beijing has forcefully backed huawei in the spat with washington and the operators have added support. Haidi coming up on the next hour of daybreak asia, etf hitting the oil slick. To discuss without the fallout and perhaps even a role played in the oil selloff. Later on in the hour, a chinese beverage giant takes a hit from the verona coronavirus pandemic. They will be with us with his outlook. The market open is just about upon us. 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 breeze. Visit xfinity. Com moving today. From newod evening york, i am shery ahn. Haidi and i am haidi stroudwatts in sydney. Asias major markets have just opened for trade. Lets get you to the top stories of the hour. Markets futures point to lower openings in sydney and hong kong. Oil recoveries in asian trading after another collapse overnight, slumping demand pushing june futures nearer to 10 a barrel. The coronavirus keeps billions at home and many are watching lots of television. Netflix jumps but investors are asking how long the binge will last. Sophie kamaruddin is in hong kong for us. We see the volatility continue. Checking in on brent futures, we are seeing them gain ground. Theping more than 20 into close on tuesday. Ice preparing for negative training while cme is allowing options. Ive wti above 14ery trading a burial 14 a barrel. 225 extending losses for a third session. Has sydneyff by 2 has the worst drop in the benchmark in more than a month. We are keeping eyes on beach energy and challenger. Lets check in on what is going on with other assets. Treasuries after the overnight rally, a quiet start for u. S. Yield. Jp morgan pointing out that investor positioning has swung back to neutral. Aussie bonds, little changed. Calmed money markets in australia. Gold resuming the advance. Forecasting prices will nearly double in 18 months. Gainss. Dollar extending amid risk we are seeing in the oil markets. Haidi oil, the epic collapse has spilled into the etf market with the biggest crude tracking fund forced to suspend new shares. Sylvia, great to have you with us. Of course, we continue to see the downward pressure on oil prices. The may futures going into negative territory for the first time ever. June futures also under pressure now. What does this mean for oil etfs . Andthey trade below zero, what will be the ripple effects . I deske look at the wti wti contract for may, it fell below zero yesterday. Today is the last day of trading for that contract so i think that has fueled some of the wild price swings. The june contract is more actively traded. Sotty much, it was 66 or percent lower after closing above the 20 mark on monday. This Unprecedented Demand loss from the coronavirus pandemic. Pretty soon, there will be nowhere to store food. What to store crude. They are willing to pay buyers to take crude off of their hands. Imagine if you are delivering. Etfs ine most popular this space. It gives exposure to the futures. It fell about 20 today. It was halted pretty much for as oilning, then went on was absolutely beaten down because of this oversupply and lack of storage. I think about a quarter of their exposure to the june contracts a lot of people bought this, thinking that it hit an absolute bottom, how can it go below this point . A lot of this just led to the etfs being down at historic levels. Yeartodate, it is down about 75 or so at the close today. Today, the june contract was down about 30 . So what they are doing is pretty much allocating to different futures just to keep the etfs opening to prevent it from going to zero. The coronavirus in the last two months has made it very hard for issuers to manage exposure. Haidi given this uncertain day, whether it is coronavirus, the oil crash, before that we had trade uncertainty. How important is it for these companies, in the middle of earnings season. The focus on resilience. Ofvia i think in terms earnings season, the biggest thing for oil, until people start driving to work again, flying, filling up cruise ships of airplanes, there is way too much volatility and stability to get in. If you look at other names. We saw some positive news out of netflix today. There is a lot of shortterm in terms of thinking about earnings. The companies and names that have strong Balance Sheet said flexibility will probably continue to hang tight. Consumer discretionary is doing well. If you look at the top name in that index, amazon is number one. Everyone is ordering from amazon. Every household staple. Groceries, toilet paper. Amazon is just growing and growing. So you will have these stories of good earnings but i think overall a lot of it will be around strong Balance Sheets and who can be resilient in terms of this volatility. Haidi there is a big difference between the economic outlook, which is pretty dire globally, and what the markets are doing. The fact that we have seen a number of markets jumping into bowl territory when you have the u. S. Recession risk for the next 12 months priced in at 100 now. Does this mean there is a lag when it comes to investment prices or do investors feel that prices have bottomed out . Sylvia i think it is a little bit of both. There is a big difference between the actual recovery of the economy and what the market does. The fed support has been robust and fortunate. Economic outlook is probably grim in terms of how we get millions of people back to work. Markets were down the past two days but generally up in february. We need to come from job numbers , people getting back to work, consumer growth. The market is priced in a scenario where earnings are expected to be down but back in line. We are talking about an 8 trillion Balance Sheet for the fed. Fiscal, Monetary Policy online, supporting online. The truth i think is that we need more certainty around the pandemic. The imf base case is that gdp will shrink in 2020 before it recovers in 2021. I think for that to happen, we have to see resilience for firms. We have to see what happens in terms of, do we continue forward with globalization, with working the way we used to. Start tos companies recover, people start to get back to work, we have to see how the consumer behaves. Reflect job numbers quickly that employment is back online . Does china rebound. Almost 7 . Shrank by we need to see what happens in china. 20 of their growth is from experts. The partners need to get back in line in order for us to feel some confidence that by the end of the year maybe we will begin a better position of positive earnings again and positive gdp growth gdp growth. Haidi always a pleasure to have you. Sylvia jablonski. Coming up, more on the oil turbulence. Early asian trade after two days of massive selloff. Chinas ambassador to the u. S. Says that relations need a serious recent. Serious resync. This is bloomberg. You are watching daybreak asia. The number of Coronavirus Infections around the world has topped 2. 5 million with more than 175,000 people now dead. However, the recovery rate in italy has almost surpassed the number of new cases for the first time. Oktoberfestd has been canceled for the First Time Since world war ii. Eu lead eu leaders open a summit this week with no clear instructions on the fund and no specific details on how it will operate. It contains no financial costing, no timeframe, and no vision of the investment needed to stem the fallout. No concrete decisions are expected. China is calling for a reset of relations with the u. S. , saying a lack of transparency in washington is worrying. The ambassador said that beijing has shared all that it knows about the infection. se u. S. Has doubted china openne buthe ambassador said at china has done its best to keep trust. Obal news 24 hours a day on air and on quicktake b bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. This ibloomberg. Brent, lets take a look at what we are seeing at the moment. A bit of a covery when it cometo pricing in the Asian Session. Another tumultuous overnight session. Contracts for june plummeting 43 . James bond hill joins us now. Some of our guests discussed some cautious optimism that it was just a technical blip that we saw because we work so close to rollover for the may contract. We have since seen the june contract seeing that level of selloff. Does that tell us that volatility will be here to stay . The price action we saw overnight really gives the lie to the argument that will be saw on monday was an isolated out of volatility. Of course, the underlying fundamentals driving this have not gone away. Basically, we are seeing Unprecedented Demand destruction caused by coronavirus. At a time when opec was pushing out record amounts of oil. Since then, we have had a production cut, but it does not go anywhere near to balancing out that production cut. As june contract that is low 6. 5 which is in itself quite astounding. We have seen a recovery. We are currently around the 14 mark. That is a gain from the closing level yesterday of over 20 . The market we are in, people are saying that is a slight blip. Shery is there anything other than actual real production cuts to stabilize the market at this point . Me think about what could stabilize the market. I think there is two things. Firstly, we need more production cuts, clearly. We heard that opec had a Conference Call yesterday. Clearly, they will be discussing what is going on right now and the need for more drastic action. I think the sooner that comes, the better. On the others have the coin, we need to see some signs of demand coming back. On that front, people will need to look closely at those virus statistics in terms of the recovery starting to overtake the number of new cases worldwide. We are not there yet. That situation remains, there is really very little demand out there and no storage left. There is really very little value in holding a barrel of oil right now. Until we see the demandside and supplyside, i think this volatility will continue. Next, coming up quarantine helps send netflix above even its own growth estimate. But how long will the boom last. This is bloomberg. Lockdown dueobal to the pandemic has been a boon for netflix. It has added a Record Number of paid subscribers. Theeenan joins us with after hours action. A big stock surge quickly fizzling what happened . Long canuestion is how this surge last . If you look at the after hours charts, that did send the stock about 12 higher but you can see right now it all fell down pretty flat. Expect 7. 5hey million subscribers in the second quarter. It is not what a lot of investors expected. You will see that crisis hit new highs this week. Stocks close to 34 year to date. Investors might have wanted to hear that they would be continuing higher numbers. Pandemic and of chill. If the numbers come down, how will it sustain . Probably, it wont. A bar chart of viewership while people have been working from home, general viewership of services such as disney and netflix. You will notice in peaks during the working hours. That is kind of predictive of the fact that once people return to the office, viewership would be there. Netflix has admitted they expect viewing it of viewing to decline as home confinement and spirit confinement ends. Haidi international subscribers, too. We also saw snapchat has a big winner after hours. Su the emerging Market Growth for netflix, if you look at one of the bar charts, huge growth for india. We also saw a sizable boost in the asiapacific. The snap, i should say, the Parent Company afterpchat, was on fire hours. You can see that shares surged as much as 22 . The app is increasing in popularity during the lockup. This is another social service that has benefited from the pandemic, if you will. An average of 229 million daily users in the First Quarter. Is tooe also saying it soon to know if the surge in usage will boost revenue. Advertisers are expected to trim budgets during the outbreak. Rising on the boon for both netflix and snapchat, but it is not clear how that translates into a sustainable game sustainable gain. Haidi cocacola says volumes have dropped about 25 when it comes to the Global Situation since the start of april. The coronavirus clearly heading sales outside the homes and in entertainment and sporting venues that have shuttered. The coke ceo saying that they are preparing for a worstcase scenario for the second half of the year. We started the year in strong position both operationally and with our Balance Sheet. Steps inaken decisive the month of march to strengthen our liquidity position. As we talk this morning, we see a difficult q2 ahead. Second half of the year, i would not want to speculate quite yet. We are getting ready to be able to prevent for any kind of scenario, given that our business is global in nature. I would expect the recovery phase to be gradual and to take different shapes and forms in different parts of the world. For us, it will be all around staying flexible to meet the particular situations that we see around the world. Haidi so far, you have reported a 25 drop in global sales. What could you withstand without being stressed . A 40 , 50 drop . Ahn i think we can withstand significant drop in q2. For the second half of the year, we are prepared for a worstcase scenario. We do expect gradual recoveries though. Around the world and we will be wellpositioned. As i say, market by market, it is important to have the flexibility for the worst case, to be able to invest and reengage as appropriate. We will be prepared for whichever scenario comes through. Can we talk about what the word temporary means. In a statement this morning, you set that the business believes the pressure is temporary and believes there will be improvements in the back half of 2020. What do you think the longterm effect will be on all of our whether this all of our willingness to go to restaurants and drink your product while we are there . Im curious how you think the longterm changes in Consumer Behavior will affect your business . I think for sure we will see some behavior changes around the world, with respect to how people shop, how they eat. I think with regards to the beverage industry, we are wellpositioned to adapt as we aed to, whether it is being more active player in the digital channels, whether it is partnering more with takeout and home delivery. Aswhether it is adapting needs be in the restaurant environment. Is ai do think we will see gradual recovery starting in the second half of the year. Going into 2021, more of a return and time to adapt is appropriate not only for our business but for other industries that are dependent on the away from home channels also. The cocacolas cfo john murphy. Get you a quick check of the latest headlines. United is seeking more than a billion dollars in a share sale. It is expected to price at a discount of 7 on tuesdays closing price. The sale is just the first from a major u. S. Airline in the pandemic. That a saleports could amount to as much as a billion dollars in board representation, and the announced as early as this week. Travel bands caused by the coronavirus have hammered online bookings. Lyft says passenger numbers are down but it declines to say by how much. Estimates are that bookings have dropped as much as 80 . Play more to come. This is bloomberg. Lets take a look at how asian markets are setting up for the rest of this trading day. Asian stocks extending declines. Off off by more than 2 . Just off session lows. Ae kospi edging lower for Third Straight day. Underyo, the nikkei 225 pressure, losses of about 2 . Also seeing energy names under pressure. We are seeing rendered Energy Stocks under pressure while oil prices are climbing even as fears remain of the mill town extending. Meltdown extending. That itplayer saying does not expect to restart. Ffshore drilling reporting that ossie on airlines will get a 1. 4 billion lifeline from banks. On nintendo. Rising after the activist investor boosted its position in the stock. Nintendo reportedly asking suppliers to boost production of the switch console as people at home turn to gaming for entertainment. Lets turn to singapore, which has extended its lockdown. The Migrant Workers living in dormitories is a particular challenge. Really, singapore went from being a model of containment to now this explosion of cases. Where are we in terms of trying to contain the virus. Lets just say that it is a race and, so far, few signs of success. Yesterday, the second day in a row that numbers have exceeded 1000. Then, it is largely from classrooms, the dormitories. To put in perspective, there are almost a million foreign laborers here, almost 1 5 of the population. They have been packed in rooms that are not necessarily favorable in terms of hygiene. The lockdown was extended yesterday. Supermarkets and elsewhere, more of the workforce will be working from home. Schools remain shut. They want to make sure they keep everything pretty much under control. The government also asking singapore residents to use an app. A Million People have installed and they want more people to do that. It is a tough situation in the lion city. Haidi tough when it comes to lockdown. They are starting to show some flexibility in how to make the most of these workers. Airlines, hospitality, transformation transportation. Both to fill the gaps in the economy and also to ensure that as many people stay employed as possible. At traineople stations, social distancing. Visitors, taxi drivers transporting groceries, the surge we are seeing in online purchases. Thousands being redeployed. Singapore has been really quick to respond to the new reality that in fact it is using this as an opportunity to encourage the workforce to reskill for the future. The government also providing a lot of support yesterday. Billion,d another 2. 7 bringing the total amount of stimulus to almost 45 billion. A lot of help for an economy that is already set to shrink. Haidi haslinda amin, our markets coanchor, in singapore. The Chinese Ambassador to the u. S. Says that twoway relations need a serious rethink. Cui tiankai spoke on the risks of decoupling. I should be hoping for more pausehat, not just intentions but a serious rethinking of the foundation of this important relationship. For the last few years, there has been so much talk about strategic rivalry among the major powers. Look at the situation now. Had suchble virus has a big impact on all of us. Very few people, whether. Ournalist, strategists hard,lly have to think what are the real threats to the globe . What are the real threats to humanity . What are the shared vulnerability for all of us. Where did the true interests lie and how should we define our relationships on the basis of recognition. Hopefully, this pandemic will teach all of us a good lesson, although some philosophers have said that people seldom learn lessons from history. I hope we learn a good lesson this time. Chinau. S. Cooperation can be based on a more realistic foundation. Peter navarro, who is a president isor to that china wants to be the first with a vaccine. He says that china looks at development of the vaccine as part of a zerosum competition with the United States. We have made it public, shared everything we have learned with the World Health Organization and other countries, including the United States. There were a couple of phone calls between president xi jinping and donald trump in the last few months. In addition, there were phone calls between the chinese minister of public health. It ongoing communications. Doctors,erences, medical professionals. It is all openly transparent. Companies, some of whom i have talked to personally, working with chinese counterparts on developing drugs. You have to ask these American Companies what they are doing. Kevin says the machinery of dialogue is now fundamentally broken. Does this suggest that mike pence and they should get together and have regular dialogue . Say,rst of all, i want to as far as china is concerned, we have been consistent. We always stand for dialogue are open to all kinds of mechanisms. Weret all the changes initiated by the u. S. Side. When you have a new president ,. Ew secretary of state meetve been trying to their requirements. Level,tely, at the top there is a good working the twoship between president s. Whenever they meet, talk to each other on the phone, the conversation is always positive and constructive. Of course, we have to do more at lower levels. Chinese ambassador to the u. S. Sees oil, a person slipping back to negative. More with our conversation with the hedge fund manager. This is bloomberg. G. We are seeing a rally in oil in the Asian Session after big losses overnight. Overti contract plunging 40 . Rebounding now to the tune of 20 . Remainsal demand story crushed by the coronavirus outbreak and various economic outbreaks around the world. Given that we have seen volatility extending to that june contract, lots of analysts expected wild price action to come. We also had the opec call overnight but no new measures were announced. On crude. He alarm he told us what he thinks is needed for these wild market swings to society. Trading with high volumes, there is only 6. 6 Million Barrels trading below negative prices. Prices canat the turn negative. Shows prices have been high for too long. Hey have been propped up i dont know, maybe the fed is buying as well. Andeople buy in the future keep them artificially high for the market doesnt get the signal fast enough. Bonds and oil, equities, central banks. So, it is what it is. Eventually, things will get better. We cannot ask opecplus to do all the work. We need things to happen now. Oil cannot be moved. Everyone is talking about the demand picture. Where do you see demand right now . Pierre it could be down 30 Million Barrels per day. If you look at the momentum we built over the month of april. Year on year, it is simpler. Lets say it is down 25 Million Barrels per day. At least 29 Million Barrels a day. In victoria being built over one month. Running out of space now. Demand will go up. We dont know how fast because the market is focused on the vshaped recovery. I dont think we will have a vshaped recovery until we have a vaccine. The number of cases will go up. To comewe will be able out and go back in, it be like that for at least a year. Onand is probably a function prices from current levels. Supply will go down. The question, can supply go down fast enough and demand go up fast enough to avoid seeing negative prices again . I would not at against seeing negative prices again. It could happen again. I think people should be very careful about what to buy, when to buy. It can be completely wiped out. The u. S. Oil etf, today, they had to hold that. If you said you think the cme should close out the etfs, what does that do to the price . I think there would be no other choice. It worked well when you had 50 oil. Margin. Futures, putuy oil bondsdollars, then 43 in or anything. It will be at 15 probably because of increased volatility. Actually etf cannot with100 million of futures 100 million of cash. They need more cash. Liquidatehey cannot the moves of the wti future anymore. I think that is why there is a high probability they cannot do what they are saying they will be able to do. I think the solution is for the etf to eventually be closed. The december contract, december 2020 or 2021, by then the market should be functioning again. That was Andurand Capital management cio. Indias is investing in geo platform. This will make facebook the largest minority holder in geo platforms. Geo platforms is part of reliance industries, giving facebook a foothold into a market with 50 million users. Facebook says they plan to create new ways for people and businesses to operate more effectively in the growing digital economy. This is bloomberg. Breaking news out of china. We are getting the latest coronavirus cases out of china. 42 asymptomatic cases, no coronavirus deaths again on april 21, saying they have 30 coronavirus cases and 23 out of 30 have been imported. Some we are just getting breaking news when it comes to the retail sector. Of course, badly affected within the u. S. As the lockdowns across various states. Seeking to raise up to 5 , seeking toebt raise inventory as collateral for 3 billion in real estate to raise another 12 billion dollars. Chinese consumers seem to be losing their taste for the fiery chinese liquer. The distiller is forecasting sales growth and its slowest in five years. Is beverages Senior Research analyst. Alcohol consumption rise as people have been staying at home and moutai has been an investor darling. Is this because of the kind of alcohol that it is . The mcleish the euan moutai results has less to do with demand and more to do with the supply. There is a shortage of the key accounts for about their pit constraints on supply in 2019. From 2000 rmb to almost 3000 rmb in the middle of the year. It is really much more of a than a demand driven revenue line. What is interesting about u, much of it is consumed at banquets and driven by business. The 45 consuming is in weeks before the chinese new year, when companies are having year and banquets. The companys pain for the alcohol giving awards and gifts. Waspeak season for sales relatively completely unscathed before covid hit. At this stage, the industry really has not been impacted the tear really. Shery what are you seeing in terms of restaurants coming back online across china . And just the fact that we will continue to see more restrictions on bars and nightlife. What will be the impact on the beverages sector . Euan we started monitoring restaurants in mid march. On march 16, we caught up 240 restaurants across the country. 3 of the outlets had reopened. More premium outlets had reopened than mainstream outlets. The first, more than 90 had reopened thats a pretty good signal for the industry. One of the pushbacks, restaurants reopened and there is nobody in them, that does not mean a lot. We have been monitoring the queu saturdayeak friday and dinner times. 7 00 p. M. The 00, past few weeks, we have been seeing very substantial queues. Life is opening up and they are actually quite eager to get back out and back to normal. , the statetions council raised the restrictions on restaurants a couple of weeks of and the vast majority restaurants, there is no constraints on the capacity or number of tables, diners. Outlets,life, karaoke bars, nightclubs, they are euan. If these, i wonder transactions, are they governance issues we could be concerned about with moutai . Euan that has been a big issue in the last year. In may of last year, the Parent Company. Pleasantlye surprised that the magnitude are ther than the threshold for required shareholder approval. 6 billion, they would require shareholder approval. It is still a governance concern. Shery thank you very much for joining us. A back beverages Senior Research analyst. Hat is it for daybreak asia our market coverage continues as we look ahead to traits in shanghai, xinyun. This is bloomberg. It is none 00 a. M. In beijing, shanghai and singapore. Counting it down to the star of the trading day in hong kong. And on the chinese mainland. Its have a look at our top stories. Stockmarkets lighting in a continued Energy Weakness in the coronavirus turmoil. Well hedging higher after a two day dive