Dimer scraps its forecast for higher profits amid the pandemic. Results come they can pass. Credit suisse provides a full picture of its First Quarter. Dont miss that exclusive interview. Into some ofget those storylines. This is about a First Quarter that will be difficult to assess. Thats a beat, during the First Quarter, Credit Suisse beat on the estimates, delivering 1. 3 billion. For everyone who has a bloomberg terminal, look jump in there. Francs, theswiss estimate was for 203 million. All of the swiss banks have already adjusted and announced a dividend. Instruction there will be more impairment to come. Thats the top line. Nejra absolutely. As you hinted at, one corporate casualty in the Coronavirus Crisis has been dividend payments. Credit suisse has already said they would hold back on some of the payouts. Ist First Quarter provision the red headline to focus on. As you say, they may see more impairment come, another line dropping is that Credit Suisse may see more reserve bills in coming quarters so it needs a loan loss provision with the u. S. Banks very much in focus with european banks, there is expected to be a challenge from european banks. There some feeling that the likes of Credit Suisse and ubs maybe a little bit shielded than some of the others, for example deutsche bank. There are different Business Models, but at the moment, european banks trading at the steepest discounts to u. S. Banks on record, something to bear in mind in terms of the context going into this. Manus will catch up with the new ceo who joins us a little later, at 9 00 a. M. London time. One of the big nordics delivering their numbers. A loss of 1. 60 9 billion, thats tighter than the market had anticipated. The credit impairment number 2. 15, lending to oil and gas in the nordic is one of those big issues, will lending criteria be changed . Ratio rises to 16. 1 from 15. 9 . Quarter, the first First Quarter core equity tier 16. 5 credit impairment, so everybodys coming through. The question is what happens next in terms of exploring exposure. Today is a big day, not just for the banks in europe but of course we will have that conversation shortly with the schwinn bank ceo in terms of what is the underlying attitude. A big day for europe. Nejra absolutely. Just on Credit Suisse, they say the scale of the virus is difficult to assess, but they expect resilient performance during the crisis. A couple more lines coming through, saying underwriting and advisory recovery may be limited, but we will come back to that conversation on the banks. In terms of europe, generally the news we had overnight about the ecb being able to take on , thedebt as collateral question is whether that becomes part of the Asset Purchase Program and whether the ecb to some extent could be the backdoor way for europe to get to this debt burden sharing which is such an issue as we look ahead. I was slightly joshing this morning saying it was less moral hazard at the ecb than there is at the fed. Taking this junk rated debt and collateral. What is worth sharing, that is the question. Be euros is it would positive. The markets are moving. Nejra in terms of what youre markets, a bity of green on the screen in asia for a second day. The s p recovered from the worst drop in three weeks yesterday. European features in the green as well, in terms of the 10year treasury yield. Were back after dipping the lowest this week. The bloomberg dollar index absolutely unchanged, underperformance in the aussie with weak pmi coming out of japan overnight as well. As you say, very much still a focus on oil. Brent up 11 , but a lot of questions on whether we see the same thing we saw in may. So this is just a brief stabilization. U. S. , u. S. To the treasury secretary Steven Mnuchin and has said we anticipate most u. S. Economies will restart by the end of august am suggesting the hotspot of new york has continued to head in the right direction with death at the lowest rate since early april. President donald trump has signed an executive order temporarily suspending u. S. Immigration. Marie, great to see you. Lots of things to discuss, but how long is the temporary suspension . It is for 60 days, but President Trump did indicate it could be expanded the sees it necessary. Two things to take from the executive order, one is that it applied to foreign nationals on foreign soils, so if you have right now a valid visa or travel document, you will not be affected. The second thing is that it also affects individuals looking to become permanent residence in the United States. The measureump says will ensure that when the economy starts to reopen, americans are the first in line to get a job. This is something we have seen out of his playbook since 2016, centerpoint of his election campaign. The economy we know has been weighing on the administration as a top priority. Right now one in seven americans have a job in february do not have a job, and that will get worse we get to jobless news today as well. And you heard Stephen Nguyen saying the economy relatively should be open by the in the summer, in august. What we see the administration doing is slowly reopening some of the states. Were seeing progress in new york, recording the fewest daily for talent he since early april. New york is focusing on building tracing plan. , job that fear in america losses at a 45 year high, the biggest pendulum swing on record. In the specter of war, i refer to the tweet. Thinkingof people are about the conversation we had in january, right now President Donald Trump tweeting about the fact that he is giving the navy, tothe navy has authorization destroy any iranian gunboat that harasses american ships. It comes after what happened last week. Last week 11 gunboats of the Islamic Revolutionary guard and very close to american ships. That could potentially play out a little bit in the oil market. You know any kind of interruption of oil through that straight could disrupt the supply side. So little bit of support on the oil price, but i would say this premature to start thinking about supplyside disruptions we. Ave serious demand destruction done, lets get you up to speed with the first word headlines from around the world. The u. S. Investigations are taking place on inside information on russian negotiation with other oilrich states. Sources tell us the regulator is this. G the u. K. Is also investigating suspicious trades. The commission has floated its trillion euro Recovery Plan ahead of the Virtual Summit today. In good news for countries hardest hit by coronavirus. Korea, the country has suffered its worst contraction since the Global Financial crisis. Suggesting the country may not grow it all this year. Theowing consumption and coronavirus, the u. K. s planning and the data will help scientists understand the rate of infection. Prime minister Boris Johnsons government has been criticized for not doing enough to trace that outbreak. 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. Nejra coming up, major state aid. House Speaker Nancy Pelosi tells moreg there will be on that next. This is bloomberg. Manus this is daybreak europe. To the markets now, s p offers a premium over treasuries, the widest in a decade. Market, do youd want a little bit of yen in your protection bag . The head of fx strategy, good to have you with us. Should we have a little more active swag in our bag . What are you so optimistic and how do you protect yourself from an fx effect . Good morning, thank you for having me on. Of economic resumption months they do end, we see Downside Risk in Market Equities nd while its had a big intraday correlations have broken down. We think of it in three phases. , thate an initial balance was on the initial equity move lower. Within had a subsequent rally, this was on the emergence of dollar funded stress. Since then weve been quite , and equities are recovering somewhat. But the key question Going Forward is, when will it come off . Will we see the resumption of dollar Funding Strategies throughout the market . Should reliably perform as a short. Nejra interesting, sam. How are your spacing expressing any views around the volatility weve seen in oil prices . U. S. T shrugged off the inventory yesterday but a lot of people saying even 100 a barrel on wti is not implausible at this point. Is, whileirst point it may stills that have important implications for other markets. Events which previously were being dismissed a zero probability, which means Operational Risk has to be means it can, and stay quite elevated. Is, the crosstor currencies in response has been whileed relative to canada and norway have underperformed, not anywhere to the extent that one would expect. When we look across the metrics, they reveal that the market was already positioned with its dispositions across g10 currencies in the commodity to parts of the downside. Manus can you tell me a little more about the dollar positioning . The libor rate coming in little , relative to the you a s rates, compressing a little bit. That tells me something about liquidity in dollars, something about the destressing within the dollar market and thats what weve got on their. Liquidity easing, and is that going to have an impact on dollar positioning . In short, i think the answers are yes, and yes. Ande seen some pressure that is priced to continue into the current structure as well. For is most important Foreign Exchange is the fx and bond yields. What wees into account were talking about, but doesnt take into account the cross currency basis. From threemonth forward points youreualized, it shows currently looking at a hedging cost if you own dollar assets. This is about 90 basis points annualized, the lowest since 2015. Rate differentials, we think that ultimately will undermine the dollar. Nejra sam stays with us. Relative flow of funds in respect to the Central Banks, not to do with the coronavirus. I found that really interesting. Lets get to house Speaker Nancy Pelosi, telling bloomberg that a major package of 8 and local government be in the next stimulus from congress. Take a listen. We will be able to do it in a very strong, bipartisan way, to pass legislation as it passed in a bipartisan way in the senate. Fare, but werd will take a recorded vote. We are 430 members now and we need to have a quorum and majority to get it passed, but we will. Something like 370 billion to replace the ppp program. 25 boone dollars for testing, what is not in the bill that you think still needs to be done . First, let me just say how pleased i am with what is in the bill. Two weeks ago, the secretary of the treasury called me and said he needed a quarter trillion dollars and 48 hours. That would mean by tomorrow, two weeks ago. The Republican Leaders said 250 for the program in knots thats it, were not making any other additions. We objected and Work Together for our proposal would they objected to that, made a counter proposal, which was rejected by the republicans. For one week, they refused to negotiate until that thursday. Then they realized they had no , and in the bill weve for weve course support the 250 which is part of what we had put together to support our Small Businesses, their entrepreneurial. Support, theres no question that we would be supporting that. But it took them a longer time than it should have to agree that we need to make sure that even the smallest of Small Businesses would be included in that, and that we would be because the key to our economy is testing, testing, testing. In the 75 billion to hospitals. Finally, they agreed to the package we put on the floor at and finally we can move on to the next phase. Does this take care of the rescue part as opposed to recovery . We talk about rescue versus recovery. As part of rescue are recovery, and what is the process of getting that done . In the first few bills we bipartisan strong, way, started with testing, and a month and a half later the administration has still not related information to said they will. That was part of recovery. They we went into mitigation, to mitigate the damage with initiatives to protect our Small Businesses, to provide more assistance in terms of health care. Now we have to go further to help state and local. State and local means this. It means the health care worker, police and fire, first responders, emergency services, the teachers in our schools, the transportation workers, who get essential workers to work. Again, its about the people. These people are risking their lives to help save other lives, and now they are losing their jobs. So its very essential that are andes have this assistance to do so in a very significant way, to recognize the lost lackue that they have from of a stream of revenue because of the economy, and secondly, what they do to address the coronavirus. That was house Speaker Nancy Pelosi. The ecb said it will accept some junk rate debt. We will look at that next. This is bloomberg. Nejra this is bloomberg daybreak europe. Manus cranny in dubai. Germanys ruling condition with of package to dampen the further Economic Impact of the coronavirus. The European Commission is floating a 2 trillion euro plan of economic recovery ahead of talks between e. U. Leaders today. The plan involves tapping the market for 320 billion euros and will partially use the existing seven your budget and the contentious rate over the rescue package, the ecb said they would accept some junk rated debt as collateral for loans to banks. The move to shield her euro areas most vulnerable economies as they face the risk of credit downgrades. And we get that s p rating on friday. Coming up, President Trump says georgia is reopening soon after his executive order suspending u. S. Immigration. Awesome internet. Its more than just fast. It keeps all your devices running smoothly. With builtin security that protects your kids. No matter what theyre up to. It protects your info. And gives you 24 7 peace of mind. That if its connected, its protected. Even that that petcamera thingy. [ whines ] can your internet do that . Xfinity xfi can because its. Simple, easy, awesome. [ barking ] manus good morning from dubai. It is daybreak europe. These are your top stories. New york reports the fewest daily coronavirus desk since deaths since early april. Steven mnuchin expects most u. S. Businesses to open by late summer. Meanwhile, President Trump suspends immigration. Somehe ecb will accept junk debt as collateral for loans. Agrees to 10 billion euros in aid. The result season comes hard and fast. Credit suisse low loss provision surge three times the amount analysts had expected. And a new ceo joins the team. Good morning. Nejra welcome to daybreak europe. Story raising pressures over where there we end up with some junk debt, could the ecb become europes backdoor to sharing its debt burden if it holds National Debt for decades, some economists are talking about . In terms of corporate earnings, i know youre going to go through Credit Suisse in just a moment, the biggest news in terms of corporate news. Third Quarter Sales down 13. 3 to 1. 70 4 billion euros. In terms of any guidance were getting, with the remainder of ,hare buyback plan suspended with a risk around coronavirus. Halting its buybacks after those details are dropping 15 . With the low long loss provisions in focus for Credit Suisse. Manus low loss provisions coming in at 568 million swiss but youve got fixed income sales trading up 26 , equity still trading up 24 . We may see more impairment in the coming quarters, and there is the point. Buyback is very much a focus, the share back is on hold and they have repurchased a third of a trillion swiss francs of until march 13. Becauseve a look jobless numbers in the united , s p futuresrica up. 25 . A lot of it around the crude rally, 14 , as the president raises angst against iran. News from the the u. S. , the treasury secretary Steve Mnuchin has said he anticipates most of the u. S. Economy will restart by the end of august. He also said the outbreak tends has canrend were seeing train you to in the right direction with deaths at the lowest rate since early april. Donald trump has shifted his tone somewhat, disagreeing with the georgia governors plan to begin reopening, saying it is too soon. Great to have you with us. Market,ve in the oil but im struggling, inventories are the highest in three years, demand in the u. S. The lowest since the 1990s. Do you trust the reprieve in the oil markets . Are you preparing for lower to come . I think thats really the big question, theres talk that president is going to help, hes going to try to do something. You do have trent 10 million jobs at stake in the shale industry. Texas is an important essay for his reelection, and i think there are some strategic implications because we pretty much already know that the u. S. Will no longer be an oil exporter next year given the loss in production. So have prices dropped too far . Our negative prices too much, given the storage concerns . Probably. Is this reprieve, as you call it, going to be rather shortlived . Some of these indicators are really just bringing the reality of this crisis back to market. As you said, this is more about the lack of demand and really about production in itself. Demand is just not going to pick up that quickly. I wouldhe short term say prices are probably going to say stay low. The one thing to keep in mind is production could fall faster than expected, not in the next couple of days, but over the next couple of months. And well take a little less time than currently estimated to see a rebound in the oil market. Thats interesting in terms of production. You are also talking about reality and markets. Despite everything we have seen, you could argue we are perhaps not seeing the full reality of prices reflected in equity markets at the moment. We are deep and earning season right now. Where are you taking your cues for the next move in equity markets . I dont think the current pricing in markets, the current rally we have seen really reflects the reality of what we are going through. You mentioned earlier the u. S. Would like to take four more months to reopen properly. Were going to see some hurdles. A lot of these tentative reopening plans, they are all gradual for sure, but they are also easing confinement measures, not fully reopening the economy. I think the most interesting part about earnings is the lack of guidance. Whats much know its going to go worse and most businesses dont know how long is going to last so you cannot q2. It to improvements in the riskso looking at ahead, even though the markets like to project themselves in the future, there are still a couple of hurdles in the shortterm that are probably not being reflected right now. Manus lets dig a little bit deeper into that. Theres about 1. 33 relative to treasury, so thats a booster treasury. This, doht my eye was you think you are sufficiently rewarded by 30 basis points of extra premium of stocks and bonds with the yield you have just outlined . Not today. If you look at the u. S. , the dividends look like theyre going to be more stable, although you might have less share back Going Forward. Its probably going to drop somewhat. I also get a lot more comfort would say in the bond market because you know Central Banks will just keep buying for such a long time in the fed is not going to even quantitate quantitative hiking or reducing its Balance Sheet for some time. Essentially when things quiet down will see organic Balance Sheet growth privet were not going to talk about pulling back on measures for quite some time. We lds are very low and the longerterm outlook is not fantastic with the starting point, but right now i think we definitely feel more comfortable and theres more risk involved in equity markets. Nejra interesting that you make ecb could beat the looking to use junk debt as collateral. Great to have you with us. Coming up, sweat Bank Earnings dBank Earnings. That is next. This is bloomberg. Nejra this is bloomberg daybreak europe. Manus cranny in dubai. Despite the fact we had weak data out of south korea and yesterday we saw the cash market recover, future steady right now. That had been fluctuating a little bit. The 10 year yield dipping just a basis point. ,ollar weakness in the session the aussie was underperforming earlier after pmi data. We are seeing some recovery in oil, despite the fact that we had an inventory rise yesterday and we still had the demandside challenges. Weve been question that through the show in terms of that reprieve on both wti and brent today. Manus oil demand over the past four weeks is the lowest since the 1990s. The debate is this, whether its full capitulation, in other words of softness in the market, and what negative pricing is, or is it around donald trump . Is it in terms of that debate . Nejra i think you have totally nailed the two sides of it there. Then we thought to ask the question again, especially with the involvement of the u. S. U. S. Biggest etf, whether we see it happening in june. Talking about the fact that 100 on wti is something that cannot be ruled out, but also when we get to result season, result should bes gus, not least Credit Suisse. We know there was pressure on both ubs and Credit Suisse. In,viewers just checking three times the estimate, fixed income sales trading up 26 . Favorlatility is to their and youve got fixed income trading up 26 pay would you got equities sales and trading up 24 . They talk about may build for the reserves in coming quarters. That is a warning shot . Nejra absolutely. Every guidance we get from every company, there is all theres also always a caveat as well. There is always uncertainty around coronavirus. Build for the reserves and coming quarters from the virus impact, but the word they used in the statement speaking of the crisis and speaking of banks, lets get to bank, reporting a deep loss in the First Quarter. He comes as no surprise the swedish lender forecast the loss earlier this month. Add to that the coronavirus impact, and has been troubled has been tough for them to turn things around. The share price has seen an almost when he 5 drop today. The ceo joins us on the phone tonight. Glad to have you with us, thank you so much for joining us. More than half of your landing is in mortgages, as i understand. Given that you might be expect house prices to fall on rising unemployment due to covid19, how big a drop do you anticipate, has that been fully integrated into the impairment . Let me just say a few words about the result, and that is that swedbanks underlying solid, and if you look at our mortgage portfolio, it is very steady. Half of our loans are into mortgages to private people. Losses ind very low history and a very solid portfolio. Can we pursue the line of credit impairments, i want to dig a little bit into the oil component. 800 million is what you told us. Do you expect that to rise demonstrably . And about how much . Im not going to give you any forecast of that. Out of 2. 2 billion in credit impairments, 800 comes from the oil sector and the rest of it comes from, we are looking into your blue book and saying lets do provisions for this, these losses have not yet materialized. Ok, so in terms of guidance that you can give, then, as we go forward, by the end of the year, you said this morning expect further progress in the u. S. Investigations. Do you have enough capital to pay big fines and provide the loans at your customers need at this critical time, and if not, what happens to the dividends . Strong capitalry situation and liquidity situation. We were handed the fine from swedish authorities. We now can put our history weind, so weve delivered got the verdict from i think we are in the beginning of the end. The authorities can look on the record at im hopeful that we now can Start Talking more about it. Manus do you have any indication of the scale of financial is there any guidance in that regard . No, i dont. Manus well, there you go. What about the investors in terms of the funds that we understand have been pulled from the bond funds . Have you seen any return of that . Arehat we have seen is that net interest in companies is actually rising from loans. Weve seen our incomes from that commission has come down, and they are roughly the same. Stay with us, we are just going to take a break. We will be right back with you. This is bloomberg. Manus this is bloomberg daybreak europe. I guess is still with us on the phone. What is the one biggest lesson you have learned about managing risk as a result of covid19 . I had the privilege of working both with the imf and the swedish industry of finance. This time the crisis is different in the sense that it is a real economic crisis, and before the banks have been part of the problem. Now i would say the banks are part of the solution. Nejra what is interesting is youve taken are different strategy in response to the covid19 response. A lot of the countries opened, is that is a difference mean that you benefit from that in any way, it doesnt look like it from the numbers, but has it impacted you at all in terms of the consumer and how that affects your business . All would say like 50yearold plus men, im no epidemiologist, but like many swedes, i trust the government and the authorities and i think the view sweden has chosen is good for the economy, and in such environment, it is of course good for the bank. If you look at the Economic Development for sweden, sweden will be hit severely by the recession. Exporter an open small country and that means that sweden will take a big hit off the downturn. The big hit, the big will you change any of your lending practices, or have risk inred any of your the oil and gas sector get . I think the two most important things we look at right now or risk and relations. That means, weve been through a challenging time when it comes our problems with dealing now it means its sort of time to give back to our customers. They stood up for us, now its time to stand up for them. Risk, ando looking at if we are providing loans to businesses that still have a Business Model, because there weve talked to with the Business Model after the crisis. As you say, theres a time for that solidarity between banks and your customers. Thank you so much, the ceo of , answering questions with regard to regulators. A number of institutions suisseng, the credit loan loss provision ramping higher. Either way you look at it, fixed income and equities, building reserves is a critical point. For defending the future of the bank, isnt that it . Nejra absolutely. The talked about the fact they have some resilience in the crisis. They increased activity in wealth management. The trading did like the u. S. Banks. Its those Loan Loss Provisions and the potential for further in terms of that which is the key thing to look at here. Not the First Quarters as much. It looks to be a challenging one for european banks in general. Ubs, differentnd models to the rest, but they did say they may see more impairment in coming quarters. Other than that, were seeing a bit of rebound despite higher inventories in the u. S. , and the demand side challenges still there. Manus whether the oil bounce endures as the president of the United States raises the specter pushing back against iran. The banking barometer on the screen. Nejra thats it for daybreak europe. Positive. Utures this is bloomberg. Anna good morning. Welcome to Bloomberg Markets european open. Im anna edwards. Matt good morning. Today, the markets say its not systemic. Futures bounce and oil builds on gains after a mammoth selloff, but as more Companies Pull guidance, can positivity last . The cash trade is less than an hour away. 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