Of the Oil Companies hire today. Out, it isto pointed holding onto most of its gains of the last few sessions, trading at 1729. Guy you bring up the fact it is friday. Friday is generally not good for these equity markets. European stocks are lower. We are tracking lower as we speak. We have the trouble another shifter the travel and leisure sector seeing some downside in the european markets today. We are down by 0. 7s present i 0. 7 . We are also seeing a bid today for btp yields. Weve got a rating review from s p coming up, plus the story surrounding where europe goes next in terms of the recovery funding. Pretty and conclusive that front. With got a 1. 90 yield btps coming in, so the periphery looking a little better today. Crude up by 2. 3 . Vonnie lets get some context for all of this economic data. Mckee,joined by Michael Bloomberg International Economics and policy correspondent. What is useful in the data weve got today . Michael well, im not really sure. The confidence numbers are a little strange that people would feel a little bit better about how things are going. Statistically insignificant changes, but the fact that we are not seeing a plunge is kind of interesting. I would have to see the complete breakdown, but in different parts of the company come of the disease is hitting people differently. Probably in the northeast, you would see a lot more consumer appiness than [indiscernible] boeing, whicht was down 295 in terms of orders , and you take out vehicles, which were down 18 , pretty much all of the categories were down, but not as much as people had expected. The core number comes up, which was not expected all not expect it at all. Guy we are trying to figure out when the u. S. Economy is going to reopen. What clues are you getting at the moment from the data, from washington about how that is going to happen, and what kind . F economic effect it will have i am wondering where it is going to show up first in the numbers. Michael that is going to be an interesting question. The president obviously wants things open as quickly as possible for his reelection bid. We used to say it was up to the virus to decide. It is still to a certain extent, but it is also up to consumers. States like South Carolina and georgia have already said that companies, stores, restaurants can reopen, so some have, but nobody is showing up. Until americans feel comfortable going out on spending money and being in a stencil he crowded can have aneconomy but it will not be back in business. Until people feel comfortable that they will not catch the coronavirus when they go outside, that will be of the real key. Barclays put out a note that said they think we will only be up about 40 of our prior gdp by the end of the year because people are going to be so reluctant to go out and spend money. Get a fed statement next week. What will the fed say in the april statement . Michael not a lot, except that they will reiterate that they will keep rates low for the economy to recover. It doesnt look like they will have to do anything more, i which point you might want to consider Something Like yield curve control. They are in a different position than the other banks that are meeting because they have already done so much. The back of japan, which meets monday, has already done a lot as well. They are expected to say we are going to buy unlimited qe. Capve got an ¥80 trillion per month, and they dont even buy that. It is going to be a change in language that doesnt mean much. The focus will be on the ecb and what they do. Guy so what do we think they are going to do . The expectation now is that they are probably going to have to do more. The politicians are not stepping up. Italy finds itself in a difficult position. Do you think lagarde and co. Are going to step up and do even more . Michael it will be an interesting test of Christine Lagarde because she is so new in the job, whether she wants to do Something Like jay powell and come out with all guns blazing and do as much as he can write up front as the fed did, or whether they want to wait and see if they get stuck with what the eu leaders finally make a decision on in there bail package. Package. Re bailout they could buy additional bonds in the highyield category. The other is dispensing with the p so that they could buy more of a particular economys bonds. On that one, they may want to wait until the eu leaders decide because if everyone agrees to go into an esm program, those who need it like italy, that opens to door to outright monetary transactions that enables the ecb to buy whatever they want without worrying about the capital key. Some tough decisions for the governing council and for madam lagarde. Vonnie michael mckee, thank you so much. We will be speaking to you again a little later on. Guy what have you got coming up . We are going to speak to hans fist berg, this to hans vestberg, the ceo of verizon. Hes up next. This is bloomberg. Guy from london, im guy johnson, with vonnie quinn in new york. Is is Bloomberg Markets Verizon Communications posting q1 earnings that beat expectations, but revenue that didnt. Tock down by around 1 now trimming guidance due to uncertainty when it comes to sales. Joining us to walk through his companys performance in the last quarter and what can expect Going Forward is the verizon ceo, hans vestberg. Thanks for your time today. We really appreciate it. Your cfo was talking about the fact that you trimmed guidance due to uncertainty surrounding future phone sales. I am curious, where are we seeing that lack of visibility . Thet in the sme sector, consumer space, the enterprise space . Hans we had a really good quarter. , and we increase eps had 26 up on our cash flow. But we had some impact in the covid19. Weeks from we will see lower transaction when we talked about that guidance, we decided to guide on earningspershare as there are so many moving parts there. Some are selected by us. We decided, for example, to keep america connected for residential customers impacted by covid19. We are not disconnecting them, even though they cannot pay at the moment. Is in ourng that numbers, but we are doing the right thing longterm and for our customers. But we are seeing strong performance. We guided down eps a bit for the rest of the year, but we thought it was more important for our shareholders for them to understand what we are working with everyday. Guy one of the critical things about returning the economy to normal is whether or not the sme sector is going to be there to bounceback. You have quite a lot of visibility on what is happening in the space right now. What kind of information are you getting . What are your customers telling you . What do you anticipate will be there when the economy reopens . Hans the last four weeks, we have seen an impact with problems paying their bills. We are not disconnecting them. We are working with them. We will not disconnect any of them at this moment. On the other hand, we see enterprise customers on the wireless side doing much more ordering and asking for more services, so it is a blended portfolio. Are impacted by covid19. They live in and uncertainty when the markets will be back and they will be back in , so they are initially expressing concerns to us. What we have seen is the payments are coming back again, both from consumers and from the small and medium companies. Still not to the normal, but clearly a small indication that they are recovering and seeing that they are able to pay. Vonnie you are in a race with at t and tmobile for 5g, i do have upped your allocation for that. When this year do you anticipate a launch of nationwide 5g . Yes, we came out in this year with clear ambitions both to build more of the wideband, but also to do it nationwide. We are actually a bit ahead. We are on plan on our 5g deployment, which is five times more excavation this year compared to 2019. But our team are doing fantastic work, working with municipalities, getting approvals for permitting and things like that, and we have good visibility from our supply chain supplying us with equipment. All in all, at this moment we are on plan. We are pushing hard forward because we think that 5g is going to be an extremely Important Technology for the u. S. Markets. Of course we expect some obstacles, but so far my team has been very good finding ways to continue to build on that, and in this quarter, we are also increasing capex. We saw an opportunity to do that more with good return on investment, and we thought it was the right thing for the country to continue to invest when we can. Vonnie do you have a target date you are sticking to . What about expanding capacity, given that there are limited airwaves available . Hans two things. First, when it comes to when we are going to launch nationwide, our technology will put in the hands of our commercial team, and our commercial team will decide when it is the right time and all of that. Spectrum,mes to our users up to 800 million , with 200 up on gaming. However, our network is holding up very well. They are doing a great job with our assets, and we feel good about having the best network in the united states. Guy you mentioned at the beginning of the conversation about the decline in revenue we are seeing as a result of roaming. People are stuck at home. They are not traveling. I am curious as to what you think the longterm story surrounding roaming is likely to be. Do you think people are going to travel less, and that roaming revenue will be structurally lower . Hans i think we are going to see a new normal in many facets of our society. One will be it is going to be slower to come back to traveling, for sure. Even though we are going to see willovery, i think people be more hesitant to travel for a while. I think we will see longterm roaming charges being down. We seeother hand,. Elehealth, remote education i think everyone has seen that that is working, and that it is a new normal that will work even after the pandemic is over. As well, a pandemic which is extremely secure extremely sutures extremely serious situation as well. Think remote education in my house is turning out to be a little more tricky then maybe we first anticipated, but lets talk a little bit about where we go next and what is likely to happen. Weve got an economy that is got to reopen at some point. I am wondering whether or not to see peopleng moving around a little bit more in the network, and also wondering whether or not youre going to be part of that reopening process. Contact tracing looks like it is going to be a big art of the way governments are going to deal with this. What role are you going to play in that . Hans on the mobile handoffs in the u. S. , we can see how our customers are moving, and that is down 35 since the outbreak of the pandemic. That means people are moving 35 less. But it is very different from state to state. 50 . Ork state is down over that is what we see in the overall path on the network. For contact tracing, so far we have not had anything on that. That are doing that as opposed to the network doing any tracing work. Vonnie what kind of shape our consumers in . I know you waived some fees, for example, extra data payments and so on. Youre being a little bit forgiving on that. Tell us what you see in the u. S. Consumer and in payments, for example. Are they paying on time . Hans we increased our bad debts in the quarter with the visit of the billy thats with the visibility we have Going Forward. That reflect slower payments and the worrymers they have for the future. On the other hand, we feel right now that customers are coming back and paying, but we are not disconnecting them. Ultimately, it is about working with our customers. It iserstand that essential to keep people connected, running their businesses, so we are not disconnecting. We are keeping them up and work with them, but we are seeing uptick in that at the moment, but we work with our customers. Vonnie obviously you are in a relatively better position than some of your competitors, and in this down market, and you got some cash on hand. Are you rethinking m a strategy now the valuations have changed . In this quarter, we increased our capex because we thought it was a good return on investment. We also made the first acquisitions in this pandemic. Acquired videoconferencing earlier in this quarter. We are in a good situation with our Balance Sheet [indiscernible] are in a good situation, but we will spend wisely and balance in these times. Number two is our dividend. Number three is paying back our debt. Number four is share buybacks. Right now it is unlikely we do any share buybacks this year. Guy final quick question. The new iphone goes out to consumers today. It is a lowcost iphone. What do you think demand is going to look like . Do you think consumers are going to be more open to a lowercost phone right now . Early,t is a little too might course, it encourage some of our customers to go that way. But i would like to wait a couple of weeks to see how things are there. But an apple phone is always exciting. Guy ok. Certainly is. Vestberg,n ceo, hans thank you very much for your time. This is bloomberg. Guy time now for our weekly etf friday segment. After seeing negative oil prices, the uso had faked drastic measures to avoid liquidation. Lets bring in Bloomberg Intelligence etf analyst james seyffart. Walk us through what weve seen. The first etf you have to oil at his uso, the largest etf in the world. It basically went into survival mode this week. It was forced to make several moves to keep itself from imploding. Typically it holds front month contracts, but they had to abandon the schedule and start expanding down the curve. They filed a bunch of Different Things to change their strategy. It is at the point now where he holds the first four front month contracts, all the way out through september. Say ng to vonnie we have to leave it there. Our thanks to you, James Seyfert of Bloomberg Intelligence, for joining us on uso. Some news now. We have the announcement that at ts Ceo Randall Stephenson is a new ceoown, and will be named effective july 2020. Once again, Randall Stephenson stepping down as at t ceo. He will serve as executive july 21. Until this is the final phase of the succession planning process that at t began back in 2017. Once again, Randall Stephenson stepping down as ceo of at t. Come ascheck the stock you can see, it is up 1. 1 . It is rising on that news. Overall, we have the s p 500 now gaining ever so slightly. It is up about 0. 2 . The dow is also up marginally, as is the nasdaq. This is bloomberg. Guy hadnt thought about that when. Weve obviously got a global recession underway. I new, lower that price point. What do you think the average price point is going to be Going Forward . Do you think it is going to be materially lower . Price points were down about 14 in the following six months, so we are factoring in a similar decline here. Basely, price points were different at that time. This goes back to 2016. You didnt have some of the very expensive phones we have now. I think there will be a shift down. Athink it will be coming from revenue perspective, they will continue to benefit because youve got higher unit volume. But it is going to dampen the. Given a lot of the technology that is in the phone is maybe not older generation, but clearly not a huge change in formfactor from some of the priors, the gross margin profile even at the lower price point should still be attractive. Guy a lot of the focus these days is on the peripherals. Watch,he air pods, the all of these other things. I wonder if consumers are going to look at those and say i dont need the really super highend phone to run all of those devices. Is there an argument that says increasingly, the lower price point is going to be the most desirable price point because then you can spend more money on those peripherals, and they work just as well . That is an interesting point. I think apple is basically going to give consumers choice. Bere are always going to consumers that want a highend camera. The camera betty liu the camera, battery life, all of these things were really attractive to consumers who were willing to pay 1200 for a phone, which is pretty high relative to how we used to think about it, but you are basically carrying around a pretty highend computer. What i want that for my younger child . Probably not. I think what theyve done is broaden the market here, and made a very attractive product at the low end. And remember, apple is trying to drive more and more services revenue. If you think about what has happened with retail right now, when you go into the store, the last thing you want to do is stick a credit card into a machine that somebody else might have touched. Who knows what the actual level is that people thing about that. With this lower end phone, you can walk in and do Contactless Payments with apple pay. Ofhink theres a lot functionality and benefit that people will get from having the lower end iphone that, again, well just rotten will just broaden the market for apple as opposed to taking the negative tack, which is just that people are going to shift down. I think there are phones for everybody at every price point at this point. Guy stay safe. Have a good weekend. Thank you for your time. We really appreciate it. Shannon cross with cross research. Coming up on the program, we speak to the ceo of intel, bob swan. That is coming up in the next hour. Now the stock of the hour with kailey leinz. Kailey our stock of the hour is nestle. Shares are off the high of the session, but still up by the better part of 2 after First Quarter results this morning that beat expectations, especially when it comes to organic sales growth. Those are up 4. 3 percent, handily beating analyst estimates of just 3 growth. Nestle is struggling a bit in the face of the coronavirus when it comes to the out of home business. Cafes and restaurants are closed. That it was overcome by the fact are going out, running to the grocery stores, stock filing food stockpiling food. That was especially true in north america, with sales up 8 . Analysts really taking note of the fact that this was a stockpiling phenomenon. It is not necessarily that consumers are consuming more in the home, but they are buying more groceries to bring into the home. One that stood out to me was pet care. Pet revenues were up 14 in the First Quarter. People arent just buying food to feed the human embers of their family, but cats and dogs. Fe sawr standout was nesca a 60 jump in sales online. The nestle ceo on the call said dont get two excited about these numbers. This was a stockpiling phenomenon. But the company is sticking to the 2020 guidance. That is likely being taken quite well by the market, given that it is not some that we are seeing from most staples companies. Unilever pulled its guidance, really underperforming given that it is catered towards beauty product. Nestle is heavily focused on food, and our analysts at bloom or intelligence pointing out that nestle at Bloomberg Intelligence wanting out that bytle stands to benefit securing its supply chains. Its products are going to stay on the shelves and ultimate find their way into consumer pantries. That means its organic sales growth target. Vonnie thank you. Coming up, we are speaking with inovio ceo joseph kim about the companys testing for a coronavirus vaccine. This is bloomberg. Vonnie live from new york city, im vonnie quinn with guy johnson in london. This is Bloomberg Markets. Lets get the latest on the coronavirus. Heres viviana hurtado. Spain seeing the fewest deaths in five weeks, and newco virus and new coronavirus cases. There is no sign that spain is going to ease up on social restrictions. One nation that did begin the process of loosening the lockdown is germany. Small shops began reopening, but new infections and deaths rise. The economy could shrink up to 7 , the biggest contraction since 1950, according to spiegel. Russia has seen new cases spike for 10 days. So has singapore. On friday, the city state reporting new infections dropped to under 900. Now in the u. S. , this ridiculous concept. That is how experts are described in president trumps comments of injecting bleach to kill the coronavirus. Plain and simple, experts are saying that is dangerous. The president is set to sign today a nearly 500 billion aid bill into law at 12 00 p. M. Washington time. As for treatment, the World Health Organization forming an International Alliance to make sure covid19 vaccines and treatments are distributive fairly, but when is that going to be . The race is on. Johnson johnson and mod therapiesdifferent into element. Therapies and development. Guy thank you very much. I want to come back to those santa fe comments, but lets continue asked those santa fe comments. Fi the vaccine uses dna to activate immune systems, and that is being tested currently in philadelphia and kansas city and china and in south korea. Dr. Joseph kim joins us now, the ceo of inovio. Thats get his take on where we are right now. Dr. Kim, what progress are you making in terms of seeing a vaccine, and do you worry that the science is currently lagging behind expectations that we will potentially see a vaccine this year . Great to be with you today. Inovio is making great progress. We started our phase i trials in the u. S. Earlier this month. Enrolling forully this study at the end of this month. We will also be starting our trials in china and south korea this summer. We are hopeful in the u. S. , we will be able to transition, assuming success of phase one studies and phase two studies this summer. Back to the science question, i think there are modern Scientific Solutions to this modern pandemic, just like what we are doing at inovio and what others like us are doing. Guy when do you think we are going to see a widely dispersed vaccine . Ceo in france earlier on saying the issue is not finding a candidate, but getting that candidate to scale so that the vaccine is useful. Also we i agree, but are attacking this twofold. One is to advance the testing of our vaccine. Success, we are trying to scale up to meet the global would demand that the pandemic requires. , i like to timelines refer back to what i agree with, with dr. Fauci, who predicted from the beginning about 12 to 18 months for a vaccine that is effective and safe to be used. How broadly they will be distributed, those are the questions for us to address as the world in the coming months. How are you finding candidates in order to test this . Accine in the making volunteers for our phase i study was multiply oversubscribed. Demand for any tools to fight this pandemic. Vaccines, as you know, is the true solution for controlling any pandemic. So i think this is not an exception. , and inovio is leading a Global Coalition of collaborators, partners, manufacturers to attack this problem, and i think we have done pretty well thus far, but we still have much hell to climb, and we look forward to doing that. We have over 200 very dedicated personnel who are working day and night to make sure that we can come up with a solution and be a very impactful part of the solution for this pandemic. Is there any guarantee that if inovio does find a vaccine for this particular coronavirus, that any next mutation will also be killed off i this vaccine, or that people will be inoculated by this particular vaccine . The changes to the virus is something we are all concerned about, just like other experts in the field. Coronavirus is not known to be as mutation will as mutated mutable as others like the flu, so we have no indication that this would not be effective against the coronavirus that is circulating today. In terms of what is going to happen lets leave it there, actually. Ive been told we run out of time. Vonnie dr. Kim, thank you for joining us today. That is inovio ceo dr. Joseph kim. If you have a bloomberg terminal, check out tv. You can watch us online, click on charts and graphics, and interact with us directly. Go to tv on your terminal. This is bloomberg. Vonnie some breaking news now. Brazils Justice Minister has resigned. It is a blow to bolsonaros administration. He is the former judge who was seen as the face of the anticorruption probe, the carwash probe, as you are member. He has now resigned. He said, it is my duty to protect the federal police, and i tried to seek alternatives to avoid a political crisis amid a pandemic. This after bolsonaro got rid of the equivalent of the head of the fbi in brazil. Markets are sinking amid concern that this will add to lyrical risk in the latin american economy. Lets bring in the head of our sao paulo bureau. There were very clear signals that this might actually happen. Nonetheless, markets are reacting. Politicalg deal for stability right now. Reporter thats right. We were expect and this from yesterday, when it was announced he has decided to quit after bolsonaro decided to replace the head of the federal police. Yesterday, the day ended without an actual resolution. It looks like bolsonaro had backtracked on the decision. This morning it was a published. Hat he was dismissed he spoke for a little less than an hour, and seemed very apologetic for the timing of his resignation, as we are in the middle of a pandemic, but that he just could not stay anymore because of what he saw as political interference in the police. Moro has almost superhero status in brazil as a result of the work he has done to fight corruption. What is this likely to do to bolsonaros administration . What is it likely to do to his rating . Julia we dont know yet how much of bolsonaros support base will stick by him. As you know, he was elected very much on this platform of fighting corruption and getting moro as his Justice Minister was a big get early on in his cabinet. It was one of the first big names he announced as a super minister. This is a man who, and the protests we saw against corruption, you would always see balloons of him dressed up as superman. He was called supermoro by a lot of people in brazil. Unclear if a lot of people that voted for him based on this platform will still support him even after this very public break. Vonnie who is likely to replace the Justice Minister, and what will it mean for the docket coming forward to the end of the year, even as the pandemic rages, as moro acknowledged . Julia we do not have any indication yet on who will replace him. We will have to wait and see. This is a second minister brazil thes in a week, just as pandemic rages. We have not seen anything in local media yet. Probably tell us whether he will pick a more political name or if he will continue his idea of having technical names, just less political interference as cabinet members. Proudly, does bolsonaro find himself in a position where he could reshape the cabinet and a little we would want bit more . Is there a way that bolsonaro can bring more likeminded people around him for a more cohesive cabinet as a result of what is happening here . That is entirely possible, that he will switch into more of his traditional views. He was a lawmaker for decades. When he rose to power as found different views in terms of a liberal economy. Selling all the estate assets, which was his super ministers take to get the economy back on track. Obviously, the pandemic and its effect have thrown a wrench and that, and we dont yet know where they are going to go even on the economic side. You had the government announcing a big stimulus package which, according to our onrces, they are not fully board with. It raises questions about what the next few years looks like for the bolsonaro government. He still has over two years in office. Guy were going to leave it there. Thank you for such a timely update. Julia leite joining us on the ousting of the Justice Minister, or the departure of the Justice Minister, down in brazil. Up next, european stocks are dows well are down as well. We will talk to the intel ceo in the next hour as well. This is bloomberg. Guy from london, im guy johnson, was vonnie quinn in new york. We are counting you down to the european close on Bloomberg Markets. In europe, we are heading for our third consecutive week down. We got stocks down around 0. 8 . We are down by around 0. 8 . Eurodollar coming off a onemonth low. Its bounced reasonably strongly. Brent a little lower today now, down by around 1 . We are now trading at 21. 14. Vonnie in the u. S. It has been a long week, but it is friday, and we are seeing movement on an Overall Index basis. The s p 500 is quite happy at 2800, just off a couple of points
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