Transcripts For BLOOMBERG Bloomberg Markets Asia 20240713

15,000. Take a look at the kospi. We are focused on samsung earnings. Samsung warning of a profit slide as this virus squeezes the tech industry. Samsung shares largely after the results came out unchanged. We are watching out for the singapore jobless numbers coming out this hour. 2. 6 , an 11 year high. We see this recovery momentum coming back in offshore chinese stocks. The moving average yesterday when things close, and we are higher here today. Bank of china among them. Dollaryen, a little strength. And some strength for the korean won. Oil remains the story, but take a look at volatility. When it comes to oil contracts, we are leapfrogging of june to july and seeing wild gyrations. We have bounced back after wti auched 10, but we lost quarter of the value when it comes to crude. It looks like volatility will continue. Into julywill roll with the spread of the june and july contracts especially for wti getting rocked by volatility. Tom we will get more on that story in a few minutes. Some lines from Chinese State media, the annual parliamentary event scheduled for may 22 is when the National Peoples congress will start. This is the event where we are looking for the growth target, if indeed they come out with it. That growth target, or will they soften it . The stimulus story and the policy response, we have a date, may 22. Normally a two week affair, it may be shorter. Quarter of its value the past few days, volatility is set to continue as prices may drop below zero as investors exit june contracts. Lets discuss that with wayne gordon, executive director for commodities fx, ubs wealth management. What is your view at this point . Opec is starting their cuts on may 1. Reaching the bottom on prices . Wayne yes, it will be a significant difference between what we have seen currently and how the second half of the year will play out. In the shortterm there is oil coming toward the u. S. , offloaded in may, and that will put pressure on the storage side. However, if we look past the shortterm gyrations in the oil price, you go into the second half of the year, there is potential to see a different market appearing in the fourth quarter. Tom a deficit market. How much oil needs to be shut down before then . Probably looking around 7 million to 8 Million Barrels of cuts per day. Potential bankruptcies, youre probably looking at somewhere between 5 million and 7 Million Barrels a day. Oil supply could come out of this around 16 Million Barrels per day down. Seen a carbon copy from the chinese they look as restrictions are lifted, then we start to see traffic flows pick up quickly. , ashe u. S. In particular those restrictions are lifted and we go through june, we are going to see perhaps not demand bouncing back to the levels we saw before covid, but certainly demand bouncing back sharply. See the oil market it is hard to imagine we will see withdrawal in the fourth quarter. Market isyne, the oil going to be testing the Storage Capacity around the world in a next coming weeks, around the same time the wti june contract will expire. What needs to happen from now until then for the june contract to not go negative . Look at the reason why in the first place. On those couple of days there were significant noncontribution at that time. Since then we have seen some of the largest holders of crude exposure. Sh out their a couple of the major ones in , in crude oil in 2021, which they have not had previously. That panic we saw on that monday and tuesday is probably unlikely to be revisited. Nonetheless, there are a lot of conditions where people need to find storage, and storage prices are moving higher. Storage space is getting extremely limited. That is why the prices will continue to bounce around into the Single Digits, and low teens, as we move toward the expiry of the june contract. The conditions prevailed in the significant congestion has been a low over the past week or two. Yvonne Single Digits in the near term, we are preparing for some type of recovery in the second half. What does volatility mean for prices in the second half . Looking at a decent amount of upside then . Wayne from that forecast 20 attive, we forecast the end of june once that may contract has expired. Amount ofe the most pressure, so we have an end of ite forecast, then we see potentially going higher over the second half of the year into early next year, around 40 to 45 per barrel. There is substantial upside particularly as we get into the end of the year when we see the oil market increasing back to a modest deficit. Then we can see prices in the mid30s and going higher in 2021. That of course is also companies y oil and as we go into the end of 2021, which seems a long way away, we may actually have a shortfall in required investment that we need to produce. Focus, ishing our there more upside to gold, and how much of that is tied to the fed and its Balance Sheet expansion . Keye yes, there are two drivers for gold at this point. Three,casted, 1800 on a 6, 12 month basis. Gold can overshoot in the fortterm, and the drivers potential of overshooting of gold is conditionally set by the fed. The second risk is a debasement of the u. S. Dollar as people look forward to the deficit in the u. S. Real Interest Rates in the begin to gos should deeper into negative territory as we go into the third quarter. Restrictionsus and continue to be lifted and the stimulus gathers traction, inflation should improve from where they are today, and as a consequence, real Interest Rates in the United States go deeper into negative territory, so consequently gold will go higher as a result, as more people want to hold it. If the fed looks to extend the current guidance, then we would see it sharply higher in gold as a result. Yvonne always great to have you, wayne gordon, executive director for commodities fx, ubs wealth management,lets get to the first word news. South koreas industrial output surprised observers, 7. 1 on the year and beat the estimate. Korea was one of the two countries not to go into lockdown in march despite being at the height of the infections of the coronavirus. Analysts are predicting worse figures for april. The latest pictures from north koreas show the capital pyongyang operating normally despite the international speculation about the health of the leader kim jong in. Kim jongun. He has not been seen in public since april 11. Some suspect he may be quickly ill, but seoul says they know where he is and it is not a crisis. Freefalling inre the worst crisis since the great depression. Members gathered against the backdrop of dismal data with more than 26 million americans applying for unemployment. Retail sales have plummeted at a record case while home sales plunged. Presumptive democratic nominee joe biden has won more top level backing, with Hillary Clinton endorsing him, and saying he would be a real president. She said he would listen to science, put facts over fiction. Biden has won the backing of his former boss, barack obama, and House Speaker nancy pelosi. 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. This is bloomberg. Om still ahead on Bloomberg Markets asia, samsung warns of a significant decline in the Second Quarter as the coronavirus tax demand for smartphones. Grim newthe u. S. Hit a mark with infections passing one million. Some states plan to ease lockdowns. We will get the details. This is bloomberg. Regrettable milestones have been passed in the u. S. , the coronavirus cases have passed the one million mark, and has claimed more american lives than the vietnam war. Is joining us. Grim statistics, but we hear signs of reopening in that economy. Number ofs an awful infections, the u. S. Has a third of the worlds tally with 1. 3 , and the situation appears to improve in many parts. Cuomo is laying out a blueprint to open up parts of the state. Cuomo is saying it would be a miracle if new york city opens in two weeks. Neighboring new jersey overtaking those in new york for the first time. One of the biggest obstacles facing the u. S. Is the lack of testing. Experts are warning they are doing a fraction of what is needed. Tom we are seeing a lot of bad news from companies, many dropping guidance altogether. What picture is this painting . Leaders like in this struggle as a war, and in one way they are right, public torowing likely to explode levels not seen since the end of the second world war. The industry was suffering before this, it is on a hospital gurney. Overnight, operating losses of 5 billion, more than analysts were thinking. The virus is ravaging through the economy, and getting it on its feet will take time and a lot more money as well. Cdc figures coming out later today from the u. S. Chinas warning on future infections, what are they doing to prevent a second wave . Rishaad a second wave, as china focuses on infections, the country does return to some semblance of prepandemic life. It is joining others in warning that the coronavirus will not go away on its own. Fluill be a bit like the and can spread without people showing symptoms. Have double the daily medical checks. They have had less than 1000 cases since the start of april, and now has 14,500. This is against the backdrop of politics, the pingpong of political retribution between the two most powerful countries in the world. Peter navarro claims beijing held back on vital equipment. And we have republican mitt romney pressing the white house to take aggressive efforts to combat what he says is chinese propaganda intended to betray the United States is incompetent. Yvonne you have to wonder where tensions will be after this recedes. Thank you, Rishaad Salamat emma with the update. Coming up, the pandemic has Given Health Care in china a boost. This is bloomberg. Tom welcome back. Now to health care. Stage to finally achieve some of this longterm aims earlier. We spoke to the cofounder of online, chinas largest pharmacy. Is going to be permanent. The impact is quite profound and farreaching. It really creates enormous opportunities. Saw chinas, we economy is turning to health in a big way. A very large number of customers choose our platform or the ,ervices have been retained even when this outbreak started to improve. The number of users for cardiovascular, endocrine, near a logical diseases increased by three times. Neurological diseases increased by three times. Talk about the delivery of personal protective equipment, and you are delivering them across the world, right . Where are you seeing the biggest demand and need at this point . We see the demand is everywhere, certainly when the outbreak was severe in china. Nationwide, to the Hubei Province and everywhere in china , when the outbreak started to improve we saw a huge demand from overseas. We started to give to hospitals in new york, washington state, and even to amazon among many others. We launched free Consultation Service on march 17 for people abroad. Then we launched march 27 the overseas service for our delivery of pde, ppe, including face masks, protective gowns and many other equipment for personal and community safety. We delivered to 237 countries and five continents. I know you launched the platform to provide ppe outside this has challenge your international ambitions. Are they being challenged by the diplomatic row china finds itself in for the handling of the coronavirus, the coverup in the beginning, and the fights has with other countries at the moment . Model, wer business use technology to enable businesses to better serve customers. Right now in china we only have overargest network serving 35,000 pharmacies in china. More than half the market. Our first strategy is to scale up business. Years we willree focus domestically in china, but our goal is to connect more than 400,000 pharmacies and provide online consultation that can oversee drug prescriptions. And Disease Management Services directly and indirectly. That was the executive chairman of 111. Com. The latest business flash filing for a secondary listing in hong kong, sources tell us the offering could raise up to 2 billion. Alibaba raised 13 billion in a hong kong share sale last year. The deal could be announced in the second half of the year, and the size of the offering could change. Starbucks will reopen almost all cafes in china. They have cut sales on the mainland up to 25 this year. 10 in the Second Quarter, but fell by half in china. Starbucks says sales will be significantly greater. Google and alphabet reported better than expected revenue, demand for advertising with high before the coronavirus. Sales were up 14 from a year ago, but the company says a significant dropoff in march when the pandemic it. Google employees will not return to offices for at least two months. Tom it seems like the alphabet earnings are one of the here ins for the mood asia. Asian stocks up 20 since march, nearing bold territory. Bull territory. , 0. 6 . Ng a lot more earnings in china, including airlines in the oil majors. Plenty more coming up. This is bloomberg. It is a good day for markets here today. Plenty of green on the screen. We are seeing some gains here today and a rebound from the last two days when it comes to wti, but you continue to see funds switch out into longer dated contracts as well so despite this volatility, we are seeing a bounce back. Wti is cheap enough or perhaps Short Covering going on. 50 higher when it comes to the june contract for wti and the rest of the market will looking pretty here. Earnings on the pipeline as well and this of course ahead of the fed meeting later on today. Lets get to the is. Gmm first news. Lets get to the gmm first. 20 from those lows 23, so itet in march seems to be one of the last ones to join the likes of the bull market we sat in southeast asia, the u. S. , and europe as well area energy is leading that rebound here. We are seeing a lot of rotation out of these tech names in the u. S. As well. Mliv seeing a little bit more of the rotation in asia as well. Lets get to the first word news with Karina Mitchell first. In china saytists covid19 is probably here to stay and will return and seasonal farm like flu infections. It is unlikely the new virus will disappear the way sars did. The asymptomatic effects make it hard to contain transmission. Beijing is lashing out at criticism from Peter Navarro, who said china hid the truth. Navarro is always telling lies. He has no credibility. What he is saying is nothing but lies and fallacies, completely sensational. Latest pictures from south koreas industrial output for march surprised observers, rising seven point 1 , and a beat on the average estimate of minus one. 7 . Korea was one of the few countries not to go into lockdown in march despite being at the height of infections from the coronavirus. Exports were steady but analysts are predicting worse figures for april. The latest pictures from north korea show the capital, pyongyang, calm and operating apparently normally despite the speculation of the health of leader kim jongun. He has not been seen since april 11 and missed celebrations for his grandfathers birthday. Some claim he may be critically ill although seoul says it knows where he is and nothing suggests a crisis. Stateside, the fed has opened its meeting amid an economy and labor market that are freefalling in a worse crisis since the great depression. Members gathered against a backdrop of dismal data with more than 26 million americans applying for Unemployment Benefits since the virus triggered business and social lockdowns. Retail sales have dropped at a record pace while home sales have plunged. 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. Yvonne. Yvonne back to one of our top earnings of stories in asia this morning. Samsung reported it to percent slide on net income to 4 billion in the First Quarter. South koreas Largest Company warns that overall earnings for the Second Quarter may fall but expect server demand to keep rising on online activities due to the coronavirus. Theing us from seoul is investment semiconductor analyst. Thank you so much for joining us. It seems like samsung, at this point, in terms of the guidance, are not painting a rosy picture for the outlook of the company for now. What is your take on these earnings . They finished their conference. Their Earnings Guidance for the q2 is very conservative. During their Conference Call in q a sessions, it seems that they thevery ready to handle post covid19 situation, so even though there earnings are conservative, in terms of their Semiconductor Business and their strategy, it seems that they are very ready for it this month. Yvonne maybe perhaps a little bit more optimism when it comes to chips and i guess it is not a surprise given the surge in usage of people working from home, streaming videos online. The dram side of things, we saw that surge in the First Quarter. Is this mostly just a oneoff, do you think . Do you think this could be actually sustained for a few quarters . Itg it is really claire is really hard to say. It is not oneoff. It could be continuing because of the distance. And why . Traffic is, many going on. In previous years, the traffic was just 1 10 of the current traffic. The traffic from many platforms and services are getting much, much higher. If any enterprises or governments, if they are not ready for this situation, and if yearkind of pandemic next or in any future, i would think they should be ready for this situation, so i think the key andnditure increased more and more usages of notebook pc computers will be continuing from now on. Good news for many semiconductor companies. The manned is there. Morehat poor more pour competition into the markets . Is that a challenge for samsung longerterm . Longerterm, i believe it will be a big change, because in many semiconductors, there are two big things. In terms of the structure, it is much easier to make. So it seems that the entry barrier is much lower, so if anyone has a lot of money that they can go into the business, and another thing for the chinese players, they could have a lot of customers within their domestic area, so it is their benefit. It is not a big threat to samsung. Why . The total samsung capacity is to china, theared quarter capacity is below 30 or 40k, so it is below 10 but i think in five years, samsung will feel a bit of a change. Samsung is trying to increase the total layers of vertical lands to widen the gap between samsung and its competitors from china. Challenge a longterm may be. In terms of supply chain, when do you expect samsung to have ironed out the supply chain issues that have been caused by the coronavirus and the restrictions that has been put in place around the world . Claire 10 comes from the domestic supply chain and 70 20 or 30 the production lines come from india. , they will restart the production from early may, so it is ok. Think am, i diversified products from vietnam. Been dependent on that. At the moment, many Korean Office workers, they need special approval. It means there are still supply chain issues between south korea and vietnam. In the long term, samsung should find any good products outside of vietnam. Get to other parts of the business as well. We have heard rivals be a little bit more optimistic in their outlooks. Slashedany has projections. When do we expect demand to recover on those fronts . Claire i think if we look into the 10 year circle, the credit crunch in 2008, so the longest demandf decreased continued only for six months, so if i look back at that theory, i believe that pentup demand from the mobile recovering be likely in six months because why . Theuse the products cycle is very short for a smart phone, two or three years. Last year, the demand was weak because of the trade conflict between the u. S. And china, and this is the second year and that weakness. Ther demand i think in the second half of thinkar or next year, i i strongly believe that people think they want to buy new phones or change into a new 5g form. Theres these kind of demands which cannot be pressured for a long time over three years or four years. I believe there will be a pentup demand in the second inf of this year or at least the first half of next year. Do you prefer sk hynix at this point over samsung, and if so, what is your price target . Claire definitely. Is 61,000 onet month. A nix is of skwnstream industry hynix is very similar to intel or nvidia, so i prefer sk hynix. Any see recovery or bottoming out of mobile demand for the smartphone market, then definitely, i will change my topic. Interesting. Hank you very much indeed claire kyung min him. Chinas big banks reported growth and profit but the pressure from bad loans is mounting. More on the First Quarter results, next. This is bloomberg. Haidi chinas biggest banks have released firstquarter earnings, reporting small increases in growth as bad loans climb amid treasures from the virus pandemic. Lets cross to selina wang for more. What did we learn from the reports of these big banks . How badly hit were they . Banks pressure from the covid pandemic. 3 largest lender reported a rise in First Quarter profit. That is the slowest. And theted a 1. 8 gain Agricultural Bank of china and China Construction Bank had a 5 increase. Chinese regulators have given of reliefs a range measures. Clearly, that is cushioning the blow. The full effect of the pandemic has yet to be felt. The government has been calling on the big banks to bailout millions of struggling businesses. Analysts still expect them to face an unprecedented drop in profits this year. Just to bring up some estimates from s p global, they forecast banks in china face additional credit costs, and we are seeing the credit losses cascade with the biggest u. S. Lenders setting aside 25 billion to cover bad debt and as we heard from hsbc on tuesday, its credit losses could reach 11 million this year. The big question is how these banks are going to fare for the rest of the year amid all these external pressures right now. What is the prospect now . What are the expectations . That prediction really depend selina that prediction depends. Aonomists are expecting slowing of growth. They slashed their gdp growth to just 1. 8 . The growth numbers, chinas Banking Industry could face an unprecedented 39 slump in profits this year, and without government forbearance measures, their earnings could tumble by 70 . Industrydid see the nonperforming loan ratio only budge slightly at the end of march, we have already seen an immediate hit on Consumer Debt that could get worse with millions of people across china losing their jobs. Fitch ratings expects the nonperforming loan ratio for consumer loans and credit card receivables to more than double. I also want to bring up that investors have never been so downbeat on chinese lenders outlook. At biggest banks are trading. 54 times their forecast. That is a record low valuation and that is after hi underperforming for most of the past five years. Yvonne a lot of questions on those dividends as well. Selina wang with that report, joining us from beijing. Coming up, from gm client to nightmare. How the collapse has affected Credit Suisse. This is bloomberg. Yvonne it is a shortened week of course when it comes to the trading week. We are getting closer to holidays japan is closed. Perhaps these moves are more magnified, but certainly, we are seeing a more risk on session with the likes of taiwan and australia leading the way. We will see how indian affairs. The dollar is a bit weaker here so we are seeing some decent moves when it comes to the kiwi, the won, the aussie dollar as well. It seems like it is the earnings front that is painting a less bad picture. Alphabet helping with the positive effect in asia. Samsung as well. We are not seeing too much change in the stock after they painted a pretty not as rosy picture for the Second Quarter all that we spoke to our guests saying, in terms of the call, they were better when it came to semiconductors, a little bit more optimistic on that front, and oil still having a pretty decent day. Above 11 so we are back the 10 mark we touched briefly overnight. Around 21,hovering and of course, all this ahead of the fed. Tom. Tom lets get a quick check on the latest business flash headlines now. Amc is theater chain refusing to screen movies from universal, escalating a dispute about how new films are released. It decision is in response to tourrsal making world available to home audiences on the same day it went to theaters. Amc says that breaks their longstanding agreement that gives exclusive access to new movies before they go to other platforms. U. S. Airlines want to be allowed to cut more services. Delta says it has been flying to and from massachusetts with just one passenger and is asking for permission to suspend flights and to aid other airports. Flights. Ants to halt it warns that continuing to operate there will significantly harm its future. Boeings 737 max aircraft are expected to remain grounded until august because of ongoing software issues. The reuters report says the delay could extend even further. Southwest airlines is the biggest operator of the max globally. It has removed the plane from its schedule until november. Boeing faces further criminal and civil scrutiny. Yvonne. The billionaire founder used to be one of Credit Suisses preferred customers. Now, its collapse has exposed a key risk. Lets get more with david, joining us from singapore with more. David, it was just recently that we heard from the former ceo, calling them atrium client. How did Credit Suisse get so caught up in that . In hong to my colleague kong for uncovering this. You are right. Its only a few months ago that the ceo was talking about being the poster child of what they want to do with a dream client, and for many years, it was exactly that. He had lots of money that needed to be managed. Entrepreneur and a dealmaker, so he needed to go to the markets and raise bonds and sell stocks, do deals, and Credit Suisse could help. For six or seven years, it was exactly that. They have a real headache on their hands. Which other banks are potentially exposed to the fallout . While Credit Suisse was carrying the brunt of this because they were the lead on a lot of these deals, other banks were involved. Morgan stanley was involved during the ipo. Morgan stanley, goldman sachs, barclays, others were involved in Credit Suisse was not the only one. They were the deepest, the tightest. What does this mean for china deals Going Forward now . Is coming just as china is opening its markets with foreign banks. They are lining up to do more deals and be more active in the chinese market. This certainly casts a pall. Banks are wondering if this is the right thing to do. We have had three or four in the last month alone. It casts a bit of a shadow over that. We have a lot of companies, chinese companies, who do trade in the u. S. They are getting hit by this as well. There stocks are down. We come back to hong kong. It raises a lot of questions. Tom senior asia finance minister, david, with the latest on the fallout. Thank you very much indeed. The worlds top Agricultural Commodities trader says the Food Supply Chain in the u. S. Is under strain but is not broken. We spoke to the ceo, dave theendon, about the impact virus is having on their bottom line. Foods, a head of tyson competitor of years, i assume, in certain areas, said the food chain was may be breaking down in this country. We are going to have to close facilities. Do you agree with that and january the food chain is breaking down . And do you agree the food chain is breaking down . Theres a lot of supply chains under strain due to what is happening and there have been Food Production facilities in various parts of the country that have had to close because of illness or because of supply disruption, but i think, basically, the ability of us to produce food is still there. There are going to be momentary closings, momentary is not the right word. We have a facility that was closed for 17 days but it is now back up and running and has been for the last week, so i think the Food Supply Chain is resilient. I think the people that work in it every day are resilient, so i think it is under strain, but i do not think it is broken. Tyson, iponse to mr. Think the president issued an executive order today saying that under the defense production act, he is going to in effect command that Food Production Companies Stay in business and make their workers go to work, assuming they have appropriate protection. He will make sure they have enough equipment and ppe to make sure they are operating safely. Are you aware of that executive order . Do you think that is necessary that you can produce all the food you want in your facilities . Dave i am aware of it. I saw it on the headline before we sat down together. That is going to call the question of keeping the American Public said to keep food on the shelves, balancing that with the health needs and concerns. We are going to have to find the balance between the two. If you have illnesses such that you cannot run, you do not how choice. A it is such a vital function. Yvonne that was the karmiel chairman and ceo, Dave Maclennan , with David Rubenstein in our leadership life series. A quick preview on Indian Markets that will be online in the next hour or so, pointing to a positive open. This is bloomberg. Save hundreds on your wireless bill without even leaving your house. Just keep your phone and switch to xfinity mobile. You can get it by ordering a free sim card online. Once you activate, youll only have to pay for the data you need starting at just 12 a month. There are no term contracts, no activation fees, and no credit check on the first two lines. Get a 50 prepaid card when you switch. Its the most reliable wireless network. And it could save you hundreds. Xfinity mobile. Yvonne it is almost 11 00 in singapore, 8 30 in mumbai. I am haslinda amin. Yvonne i am yvonne man. We are entering the last hour of the morning session in hong kong. Here are the top stories. Asiapacific stocks edge towards a new bull market with the benchmark it rising 20 from march. Futures also extend gains. Coronavirus infections continue to rise with the u. S. Topping one million cases. American deaths now surpass the total suffered in the vietnam war. Samsungs final results confirm offsetas server chips weakness in smartphones. However, it deems a decline ahead as the virus damages other markets. This is Bloomberg Markets asia. Haslinda just like that, asian markets back in bull territory, like you said, rising 20 from the lows in march. It does look as if investors have been buying the selloff. Valuations not looking that cheap anymore. The rally as we wait for that fed policy meeting. Taking a look at where we are in terms of the various market, the kospi currently up despite samsung trading lower. Samsung accounts for more than 20 of the kospi. A slide in profit for smartphones and gadgets because of the virus. South korea, march Industrial Production rising 7 . The kospi up by. 9 . This esi 300 higher as well. 6 . Chinese banks rising after they eked out profit despite the virus. The fti, we are still waiting for the jobless numbers, expecting it to be at the highest number of unemployment in 11 years. Lets flip the page, take a look at where we are in terms of currencies. Asian fx getting some relief as the dollar has been weaker this week. To be ahere appears divergence between north asia and southeast asia. Take a look at where the korean won is right now. Consequently trading in a pretty narrow range. The question coming from the volatility in oil, yvonne. Yvonne taking a look at the rest of the markets you mentioned about them entering the bull market, if we continue the way things are, one of the last regions to enter the bull market territory, but you are looking at the likes of emerging markets, which are also doing well. The dollar is on the back foot. U. S. Futures punching higher, north of 1 , ahead of that that decision. A lot of clues on what we could get in terms of clarity for the fed now that they launched this bazooka. Nifty futures slightly positive. We have seen also about a 20 or so rise from the march lows in india, but keep in mind, we reached that record high back in january. We are still 20 lower from those highs as well. Take a look at what else we are watching in terms of oil because it continues to be these wild gyrations and wti as well as in brent as well. Funds started to shift the focus to other longer dated contracts, the likes of s p global telling their clients the latest to do so, rolling to july as well, leapfrogging from contract to contract. You are seeing that spread among different contracts really be roiled by the volatility. It seems like that is here to stay. Investors are waiting policy decisions from the fed while earnings season continues to be in full swing. Victor, always great to have you. You know, we are flirting with market territory here in asia. Do you see this as a true riskon rally right now or does the threat of a second wave of actions, bad data, bad earnings, mean a leg lower, that we can still see a leg down . We could easily see a leg down. That is not really i think the most important issue. The key is, can we learn to live with covid19 . In other words, this infection is not going to go away. It will be a permanent feature of our existence for years, decades to come. Probably everybody on earth will get infected at some point in we will live with it. The answer of the market is giving us that they will be able to do so. Is ubiquitous testing and all we need our treatment options, not so much vaccine, and i think the market is saying we are probably going to get it. In terms of earnings, you are absolutely right. Earnings are collapsing, as they should. Are looking high. They always do, when you are in recession. I personally think that informational value in 2020 earnings per share anywhere in the world is very, very limited right now. Translates into multiple. What does it mean when the multiples are hired, when their earnings have collapsed . What investors are saying is that earnings will recover and the only question is the steepness of recovery, whether it is vshaped, ushaped, or any other shape. How much public sectors would continue supporting us . That includes Central Banks. Yvonne you mentioned Central Banks. We have already seen the bazooka from the fed. Trillions of dollars worth of stimulus in emergency measures in the past six weeks or so. What more can we hear this time around . What sort of clarity can we get . Viktor that is the trickiest part right now. I always think investors run the highest risk when Central Banks are quite happy with what they have achieved. You think about Federal Reserve, all the Central Banks have essentially reduced the volatility and significantly narrowed the spread. Banks,ectives of central the objective that they have is to reduce volatility and narrow spreads and that is what they have done, so my concern is that ecbhe Federal Reserve or sound a little bit self congratulating and start pulling back, that is when the risk for investors increases. Usually, investors should start panicking when Central Banks are no longer panicking. When you go through the process of gradual recovery, Central Banks would need to calibrate the response. Equitablynks will be incredibly accommodating. They will probably pump in 10 trillion if you include fiscal spending and excluding some overlaps, you are looking at 12 global gdp. I dont think they will be pulling back in any substantive manner for a long time. In fact, one could argue that these are permanent policies which are really not going to get withdrawn even 12 to 18 months from now. To thea when it comes fed, it has been cutting back its treasury purchases from 75 billion a day to 10 billion. What do you make of this . Could that boost yields Going Forward . Viktor i think what Central Banks are increasingly inclined to do is not just backstop every market, but essentially manage the yield curve. Thats what boj is already doing. In essence, that is what the European Central bank is doing and i think the Federal Reserve is moving in a very similar direction. That basically means elimination of private market and premarket signals, and that is true, but on the other hand, we have muted most market signals from commercial paper markets to mortgages, to treasuries, even to the high yields. What the Federal Reserve needs to do is calibrate it every time, how much do you require. Sometimes, they will make mistakes, just like they did in september 2019, just like they did in late january, early february of 2020. The feds Balance Sheet is exploding. We are looking at 6. 6 trillion dollars, 30 of gdp. How much room can there be for the fed . We are looking at a potentially deep recession in the u. S. Has the market factor that in . Factored that in . Viktor the room is impotent. If you think of bank of japan, it is sitting on 105 of gdp. Does it really matter . What is the value of debt if Interest Rates are zero . What is the debt carrying capacity of a country if the Interest Rates are low . The question is more of miss our location of resources. Rather than necessarily debt carrying capacity, there is nothing magic with 30 or 50 or 110 of gdp on Central Banks Balance Sheet. What it basically tells you is our economies that are based on asset classes, based on debt and financialization, can no longer function in a conventional way without the backstop of Central Banks. That is what it tells you, but there is almost infinite amount that can be played. It brings up a topic that is very timely now of debt monetization. In the bank of japans case, yes, their Balance Sheet is 100 or more of gdp right now, but it does not matter as much because their debt is held domestically or from the central bank, but not everyone is like japan. What are some of the factors that you look at . What economies can transmit modern monetary theory . Viktor you are absolutely right. Not everybody can deploy those tools. In order to do so, you need to have certainty requisites. You need to have monetary sovereignty. And currency. Ng number two, you have got to have some solid institutions of state so you are not really democratic republic of congo and the likes, and finally, you have got to have demand and supply moving together. You cannot have supply bottlenecks, otherwise, it becomes very inflationary, potentially. Of theind, a lot emerging markets did not we will see probably as much as 75 of global gdp can deploy those tools. The other 25 will very much lead a conventional market. The question is with investors will look at some of the markets like india, for example, and say it does not satisfy all the criteria, but some of that, and should we give them a little bit more room than we normally would have done . Even in emerging markets that cannot normally deploy those policies, they will have a bit more room. The other questions also, post covid19, how do you withp the fiscal spending the policy lagging in terms of transmission . Is how muchquestion do you need to mop up at all or can you pull back . If you remember janet yellen a couple of years ago was saying the normalization of central bank Balance Sheets will be so boring, it is like watching the grass grow. Powell two years to recognize the Central Banks Balance Sheet can never be normalized again. I think that is what is happening with fiscal policies right now. Everybody is discussing what will happen with an explosion of a book sector debt, how we are going to mop it up, how we are going to change it. What janet just like yellen, you can never mobilize it again. In other words, many policies you are introducing now will stay permanently or will come back very quickly at the next dislocation, whenever that happens in the next several years. Me, its a question of fiscal authorities recognizing what monitory authorities already could do, normally a station of the Balance Sheets is no longer on the agenda. Haslinda great insight. Viktor shvets. Lets get the first word headlines with Karina Mitchell in new york. Start in south korea, where industrial output year,rch rose 7. 1 on the and a beat on the average estimate of minus one point 7 . Korea was one of the few countries not to go into lockdown in march despite it being at the height of infections for the coronavirus. Exports were steady but analysts are predicting worse figures for april. The latest pictures from north korea show the capital operating apparently normally despite the international speculation about the health of kim jongun. He missed celebrations for his grandfathers birthday on the 15th. Some watchers claim he may be critically ill although seoul says he knows where he is and nothing suggests a crisis. Entering, japan is golden week under a state of emergency in what is traditionally the busiest traveling problem of the year. Airlines have cut flights. Tourist are being urged she stay away, and average spending is expected to be half of what it usually is during that week. The abe government acted too slowly at the start of the coronavirus crisis, say critics. Some European Countries are moving towards lifting virus restrictions, with france saying shops can reopen on may 11. Cafes and bars will have to wait longer. Spain is easing curbs and says it hopes to return to a normal in the next two months, and germany reports the number of new infections fell to below 1000 for the first time in five weeks, triggering hopes it will also be able to relax curbs. 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. Haslinda, those are some of the headlines. Up this hour,ng we speak to one of asias top early investor in alibaba, baidu, to find out how the pandemic is affecting strategy. Our guest joins the show in about half an hour. Yvonne up next, yet another milestone for covid19 as experts say the world may have to get used to a new normal as the virus returns in waves. This is bloomberg. Yvonne two regrettable new milestones have been passed in the u. S. The number of coronavirus cases has passed the one million mark and has claimed more american lives in the vietnam war. Some grim statistics out there but the trends still seem to think things are improving in the u. S. Rishaad no matter how you slice it or dice it, a terrifying number of infections. The United States is roughly one third of the worlds official tally of 3. 1 million cases and just under a quarter of the at least 216,000 who have been killed by this pathogen. The situation, as you mentioned, appearing to improve in many parts of the net it states. New york saying hospital admissions have been following. It would pains to say be a miracle if the city itself and areas next door reopen in two weeks time, something which is being underlined by new jersey. The biggest obstacles facing the u. S. Is the lack of testing, and experts continue to warm they are not doing enough, just a fraction of what is actually needed. China is warning on future infections as the country attempts to return to normal. What apps are they taking to prevent a second wave . Avoid a they want to second wave. This comes against the backdrop of the country returning to a semblance of preparing to make life, so what apps are they taking . Controls on travel, compulsory face masks, tracking apps will probably be the norm for some time to come. Chinese scientists are joining others in warning that the coronavirus will not go away on its own. They say that pathogen will likely return in waves a bit like to and it is simply because people can spread it without showing symptoms. Testing of course, key to this. Singapore putting its faith in this. They have doubled daily medical tests. Month ofe end of the course, it has 14. 5 thousand. Yvonne australia haslinda australia called for an independent probe. That is really risky relations with its top trade partner. Rishaad the heightening tensions with beijing as well. Of a it is causing a bit threat between beijing and canberra, it is deeply worrying for the countrys leaders. Australia is the worlds most chinadependent developed economy and Business Leaders are worried about that because beijing is not having any of this. They say such an investigation would be politically motivated and moreover, there are thinly veiled warnings of a consumer way cant of australian audits. Betweentical pingpong the countries goes on. Brandedro blend as a liar. He said beijing held back by 12 protective equipment amid this pandemic. Mitt romney pressing the white house to undertake what he is suggesting should be a very aggressive effort to combat chinese propaganda which has one goal, and that is to portray the United States as simply being incompetent. Salamat there. Ad still to come, samsung warns it auld miss Sales Forecast by doubledigit percentage, and it is all down to the coronavirus. We will assess the outlook, next. This is bloomberg. Yvonne lines crossing through in the terminal on southwest airlines. They have boosted their offering for shares now from 55 million to 70 million shares. 28. 50ill be priced at dollars per share. Billiondollar convertible bond offer, and they are expecting these proceeds from offers to be about 4 billion so just another push as Airlines Continue to suffer during this virus out rake and southwest air trying to add some liquidity. Lets take a look at samsung electronics. Second quarter earnings may decline. That could trim any gains coming from memory chip manned. Lets bring in Stephen Engle for more on that. It is quite the same tone as the preliminary results. Stephen . Again, there was signals of increased weakness in the other main divisions, the memory chips, in particular, which have offset weakness in mobile own, in displays. Tvs, appliances, you name it, given the covid19 pandemic around the world sapping demand for such items while the chip vision has been gaining because more Big Companies and servers and Cloud Computing investments have been leading to dram and flash memory increases, which we have seen in the First Quarter. Those prices higher. That has been the saving grace for samsung. Now that we have the breakdown in the various other divisions outside of chip in these final numbers, we are seeing much more uncertainty samsung electronics. Uncertainties, according to samsung, due to the virus, will persist into the second half and perhaps as well not only through the Second Quarter but throughout 2020. In particular, we can break out other areas aside from that strength in ships. We are seeing mobile shipments falling off quite dramatically and it is also affecting dram in the mobile dram space, saying that demand makes often may soften. Significantly lower according to samsung on stagnant mobile demand. Its words. Final results, the consolidated net income down 4 yearoveryear to 4 billion u. S. Dollars, and again, the outlook is uncertain right now. Thank you. Lets do a check on markets here. I want to thank our chief north asia correspondent, of course. It seems like it is a risk on session here today and we are floating flirting with chinese bull market territory. Companies are in focus today, over 300 companies on the shanghai composite report results and we are looking ahead to 800 and shenzhen as well so slightly, modestly higher when it comes to mainland shares today and we are expecting the likes of bank of china, sinopec, to report earnings and hshares. We have been watching some of these offshore chinese stocks. We ended yesterday about that moving average. Plenty more to come. This is bloomberg. Haslinda were looking at live pictures of the lion city at 1130 m in singapore. We are in the middle of the trading day. Keeping an eye on singapore banks. Declines for the First Time Since 2016. The cash for a potential spike from the virus. The net income projected to drop 21 to 28 for the quarter. It fell. Earnings season due out tomorrow. Spi down about half a percent. In line with the rest of the region. Yvonne lets get your first word headlines. Cases of coronavirus in the u. S. Raised 2. 5 from the day before, taking the overall total above one million. That is higher than mondays new infection rate but below the last week. 57,000, surpassing the number of deaths suffered. New york city reported a decline in hospitalizations. Scientists in china say covid19 is probably here to stay. Will return in seasonal form like lesser flu infections. Researchers say it is unlikely that a new virus will disappear the way sars did. A septa effects makes it hard for transmission. Beijing is talk about criticism from Peter Navarro saying that china hid the truth. Navarro is always telling lies. He has no credibility. What he is saying is nothing but lies and fallacies. Completely fictional. Vice president mike pence under fire for disregarding policy on face mask when it comes to visiting the mayo clinic. The cdc recommends mask and pence himself has repeated the urged americans to follow the guidance. He was conspicuously the only person without a mask in the mayo clinic in minnesota. He says he is regularly tested and does not have the virus. Australian inflation lifted half a percentage point quarter on quarter, slightly beating estimates as food prices were pushed higher. Lifted by 2 through march. However, coronavirus hits recreation, transport and travel. While plummeting oil prices will see deflationary pressure in the months ahead. The fed has opened its latest meeting amid its economy and labor market that are freefalling in the worst crisis since the great depression. Members gathered against the backdrop on digital data with 26 million americans applying for Unemployment Benefits since the virus triggered business and social lockdown. Retail sales dropped at a record pace, while home sales have plunged. Haslinda a Capital Funding in china is revamping its bargains after the coronavirus outbreak. According to the asian Venture Capital journal, chinese startups and tech funds raised 2. 5 billion last month. Thats a sixfold rise from february. Our next guest is recognized as one of the top vcs in asia. 15 of his investments are mega unicorns or unicorns, including baidu. Joining us exclusively is the managing partner of ggb capital. Thank you for joining us. Give us a sense to how the coronavirus has impacted the startups in asia. Well, thanks again for having me, first of all. Of if you look at the month february and march, a large part of the businesses were impacted. Particularly here in china and now more recently in the last month, rest of asia as well. In thea significant drop services. There are hiccups on the positive side, in education services, online content, online subscriptions. Over the last two months, i would say that china actually sees some recovery for the month of march in things like hotels didi and the in like. We are seeing about 60 recovery coming into april and the end of april. Haslinda do you foresee any bankruptcies at all . Do you see investors lose a lot of money . Think when yes, you will see some companies having challenges. Particularly where you have offline services, retail services. That is probably mostly impacted. Most of the Tech Companies where it is more online, they are not impacted. On travel, on business. Acquisition and revenue will be more difficult. But having said that, i think see companiesl actually going down. The market will consolidate. So, the stronger players with more cash, the stronger players with more online penetration will adopt to the new norm in terms of how they service to their customers. Advising how are you startup founders . What should they be doing . Jixun well, i think they first of all have to look. A lot of times, this is the time to really rationalize the business. Consolidate some of your services. Weed out a lot of the wastage and focus on your strength. Typically in times like this, you could also be consolidating your competitors. Really, i think to look inside before you look outside. And try to strengthen the organization, strengthen the company, and recovery growth. That is where you can really rebound the market, gain the market share and consolidate your competitors. Yvonne thank you so much for joining us. Thisre you navigating environment right now . Is it more of a pause and focus on your current folio or is it business as usual . Operatinghave been very much online. We run our weekly meetings online. We meet companies online. We are gradually back to normal, and to office, 85, meeting companies. It will be fairly localized. Even within china, across asia is even more limited. A lot of our pace of investments are definitely slow. It takes more work and more time to do Due Diligence on companies. Having said that, i think we do the investments being made wi our portfolio companies. We are making new investments. So, the pace is beginning to build up from march to now. I think the momentum will increase over time as people try to identify the winners. Bear in mind, if we look back at our investment over the last 20 ands, whether it is alibaba them at the made very low point in the market, in 2003 when we invested in alibaba. Invested. 09, we so, this is the time where you can identify some of these winning companies. Strong management. The strong actually emerge. Yvonne how is this Health Crisis impacting valuations . We have seen a bit of adjustment in the near term. What are your expectations for the mediumterm looking forward to the next six to 12 months . Un i think definitely that is why it is a good time to invest. Ofuation has been kind riding high for a little while with too much capital in the market. Right now, we do see some level of low in capital. With those with the capital raised against the time when you can really pick out some of these companies. , there are pockets of hotspots, for example in Education Technology companies. Companies are doing well. So they are getting up evaluation. Ofiously there are pockets low companies. But businesses are being impacted by the virus situation and the slowing down economy. , transitions are more reasonable which is a good thing as well. It is a time to pick out a winner with reasonably good value for money. Haslinda talking about picking up the winners, you touched on didi and how business is coming back online. Is there a sense that didi could at some point generate a profit . Jixun i think they are trying to recover. Obviously from the slowdown we saw earlier, they are also. Xpanding into new services they did announce additional investments on the market and that is by sharing and including electric power bikes. Fabric will be expended. We also invested in a company that has done really well in business. They have about 10 million on the street. These are mechanical bikes, electric powered bikes. They have really seen strong recovery. On a yearoveryear basis, march to march, they have actually seen an increase year on year in terms of their ridership. I must say when things start to recover, when things start to normalize, people are going back to work, they are looking at alternatives to public transportation. Haslinda more and more companies are staying private for longer. In fact, companies are getting to 10 billion in value without ever going to the market. Is this a way forward and what does it mean for ggv capital . I think Different Companies are taking a different route. There are companies which go out at tens of billions range and others wait up even longer. The likes of alibaba and facebook, etc. Despite them not going out or unicorns,ese larger there is a secondary market. There are exits if you choose to. The exit options are also opening up. There is change in markets. Tech companies actually get the u. S. And the more recent years, some have chosen hong kong. Others are now looking at china. Recent, just a few days ago actuallyna, it is relaxing the rules or changing techules to welcome companies or tech startups. The markets are opening up. They are creating more options. I will also say this. Variedt environment is a one. Oftentimes for investors like ourselves, m a will juggle through the narrative. You do see some of these happening. Many of these conversations are happening. Unicorns would actually make the acquisition. In times like this. Jixun foo, we thank you so much for your insight today. Plenty more to come. How bad things could get for chinas aviation sector. Still well below virus levels. More to come. This is bloomberg. Yvonne they are joining the optimism we are seeing in the markets on this wednesday morning. We are seeing, up 6 10 of 1 . Really extending the gains we saw yesterday. There was prospects that perhaps the Indian Government was proposing some help for small and medium businesses as there are plans to restart the economy. Some optimism. 76. 18. Is the india 10 year yield around 6. 14 at the moment. Airlines and oil majors set to report. Lets bring in Sophie Kamaruddin in hong kong with a preview. How much of a drag are going to see with oil talk about the loyal oil prices . . What are we expecting . Sophie in petro china, First Quarter losses excited to be steep given the whammy of the price for antivirus demand. Upstream as well as downstream. We will watch for any signals about cuts in dividends and Capital Spending given the limited scope. Although analysts are not expecting capex will be slashed much. Only cutting spending by 30 to 25 with the production focused on broad. Also, how these Energy Giants will manage Storage Capacity given that demand has waned. Ophie, Chinese Airlines earnings also do. What is expected . Sophie there was a decent start to the quarter but when the virus spread at the end of january, that sparked a deep decline in passenger traffic which will feed into heavy losses for chinas big three carriers. Operating costs probably adds to the drag despite cheaper jet fuel prices. Breaking up further, Bloomberg Intelligence expects the biggest impact because of its focus for higher cargo yield which will be one bright spot. That is where china eastern, the First Quarter woes will be exacerbated by losses on the dollar debt exposure. In air china, it will add to the drag and make for a sluggish Second Quarter. International service is still very much tempered. We will be watching for any guidance on airfares and capacity for any clues regarding the peak summer season, whether we will see a turnaround. Yvonne thank you with that preview. Want to bring you some lines crossing on bloomberg when it comes to bowing. This is according to reuters. The company is considering examining funding support available from the fed. There also considering applying to the u. S. Treasury for aid. We continue to talk about the industry reeling from this coronavirus. According to reuters, they are seeing the company lined up investment banks to market and offering to Bond Investors in the coming days. The proceeds can amount to 10 billion or more. That is the latest coming through from boeing, according to reuters. Coming up, 3m has been hot property during the pandemic. The ceo says there are glimmers of hope for a Global Recovery ahead. This is bloomberg. 3m isnda the virus is seeing strength in more than just a face mask unit. Rising fo the mind for even home improving items helps 3m beat the top and bottom line in the First Quarter. Mike roman told bloomberg he thinks demand will continue to be strong. Mike looking at where we are as we come into the Second Quarter, looking out the outlook, we did lift our guidance. There is too great uncertainty, a very fastchanging environment. We did highlight some of the challenges we are facing as we come into the quarter. Even as we came out of the First Quarter, we saw a deceleration in some of the end markets, both geographically as well as in key markets. We didnt see very Strong Demand and respirators but we saw a slowdown in areas like elective procedures and health care. Our medical solution business saw a sharp decline in the oral care business. We saw slowdown another areas like officesupply as people are working from home. That continues into q2. Re going toted, we a provide monthly updates of our business. We started that with where are we april to date. We are down midteens and organic growth globally. That is true for the americas and india. Both down. Even stronger in the americas as we come through the first several weeks in april. For is really setting us up the slow down and some of the actions we are taking to manage against and market demand and manage our costs. We are now getting to the point where a lot of economies and the president of the United States will talk about this later on. We just heard from friends that it is looking to reopen its economy as well. That process is starting to get underway. Do we have the necessary ppe in place to allow this process to happen . What kind of visibility do you have about companies having the right ppe to bring their people back into offices and factories . About the availability of ppe for people to start going about their businesses . As we start this process of reopening the economy. What can you tell us about what supplies look like, which areas look best prepared . To this pointy has been ramping up production. We have seen Unprecedented Demand for ppe. For us, the n95 respirators that are used by Health Care Workers and First Responders on the front line. Out stretcheds our capacity to produce enough product. We have been ramping up. We brought our Surge Capacity online. Coming out of sars, we invested in Surge Capacity to be ready for crises that come along and demand us to step up. Covid19, the battle here is greater than anything we had ever seen. We continue to add to that. We will take the u. S. Capacity from 35 million about to 50 million a month by june. We will take our worldwide capacity from 100 million and double it again apps we get to the end of the year to produce 200 million respirators a month. For us, that is our focus right now. The demand in the nearterm is greater than our ability to produce, but we are going to make those investments. As an industry, ramp up to be able to serve that as we go forward. It is that phase. And reopening the economy will be the next kind of aspect of that. Something we talk about a lot in our company. How are we expected to see that. I would say theres still a lot of uncertainty for how this will play out. I know we will continue to work to double our output of n95s as we go through this year. You set on the call this morning you would never raise prices during a pandemic. Will you be able to keep your prices fixed, however, and what about Raw Materials . What about the supply chain . Mike yeah, its really critical, the ability for us to supply the frontline Health Care Workers and First Responders. We have to manage our entire supply chain. Back to Raw Materials through our production and supply and the just ask as well. I would say we have had very strong support from our suppliers on Raw Materials. We havent seen raw material price increases. Part of what we benefit from is some of the Raw Materials, the key Raw Materials are things that are not unrelated to oil and gas. Refiningbyproducts of oil and gas products. We are seeing that stable. The outlook is we can manage that. 3m chairman and ceo mike roman. Lets recap some of the boeing lines. Boeing, according to reuters, saying it is mulling over applying for the u. S. Treasury for aid for funding support available from the fed. According to the reuters report, boeing is working with banks on multimillion dollar bonds issues. Boeing is lining up investment banks, to Bond Investors in the coming days. Proceeds to about to 10 billion or more. yvonne yeah, potentially tapping into the Capital Markets as well. This as we count down to a bunch of earnings in the code next couple of hours. Airlines in china will be a key focus in the coming moments or so. All reporting today. That is it from us. This is bloomberg. 49. 50 daddy, i found you good job. Now im gonna stay here and you go hide. Watch your favorites from anywhere in the house with the Xfinity Stream app. Free with your xfinity service. Now any room can be a tv room. Stream live tv, on demand shows and movies, even your dvr recordings. Download the Xfinity Stream app today to stream the entertainment you love. The following is a paid program. The opinions and views expressed do not reflect those of bloomberg lp, its affiliates or its employees. The following is a paid presentation brought to you by rare collectibles tv. 1915, the Arctic States was in the middle of world war i. Woodrow wilson was president and in the world mid director Robert Woolley decided it was time to replace the barber halfdollar which had been previously designed by charles barber. He conducted a competition to design a