Transcripts For BLOOMBERG Bloomberg Markets European Open 20240713

More protection, the ecb tweaks policy. The economy ravaged by the coronavirus. Ftse futures point lower, and much of europe is closed but we will see trading in london. Apital is coming apollo aims to raise 20 billion and several new funds for opportunities in distress and private debt, this after boeing sold 25 billion worth of bonds in the largest offering of the year. Just under one hour away from trading in the equity markets that are open. London notably, and the ftse futures are down this morning. We also see s p futures, dow futures, and nasdaq teachers down. Nasdaq futures down. We know the u. S. Markets will be open as well today. Typically a european holiday. The u. S. Has detonated a different has designated a a different day for that purpose. The notable figure, the first one i see in the First Quarter, 802 Million Pounds versus 86 Million Pounds in the previous year. This is a number we are looking out for a lot of banks during this crisis. Newsrms of other notable from rbs, it is inappropriate to give an update on their outlook at this time. They are not giving an update on the outlook right now. Is significant uncertainty, that rings true with a lot of companies during this pandemic and sudden economic stop. They are deferring decisions on future for investors waiting for income. The bloomberg first word news, the top stories for you from the bloomberg terminal. President trump is speculating china may have chosen not to contain the coronavirus. The president says he has seen wasence that a lab in wuhan the origin, and it is possible they got out due to a lab mistake. U. S. Officials are still investigating the source. China says accusations that they released the virus from a lab are unfounded. Gilead sciences may send 1 billion on its new treatment may spend 1 billion on its new treatment, but how much revenue can it generate . Gilead says it is tommy in early the outlook for the future it plans a sustainable model for patients. Amazon is telling investors to hold tight as the ecommerce giant navigates the hardest time it has ever faced. Amazon saw its profits shrank in may incur a loss in the quarter. Rangeing income could ofm 1. 5 billion to a loss 1 billion even. Apple did not provide a forecast for the first time in more than a decade. It is concerned performance will suffer later this year. It sent shares down in extended trading. Despite the tech giant reporting a 1 rise in quarterly revenue. A also sell retail sales hit quarterly record. Globaglobal 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. We are getting headlines as well from ryanair. Ryanair sees job cuts up to 3000 pilot and crew cabin members. Ryanair coming out with jobs numbers, jobs cut numbers as it releases or sees for the losses. In the second quarter, peak summer, what would normally be summer travel. Ryanair, a net loss of 100 Million Euros in the First Quarter and further losses in the second quarter. Areks in the u. K. And u. S. Set to slide for the second day in a row after sobering news from amazon and apple should asian stocks in futures. Most other indexes in europe will be closed due to the Labor Day Holiday. Cooper, ando laura first off, it is gloomy, but a row, not badn for a shutdown that we are facing. Absolutely, look at the s p 500 in the u. S. , it posted one of the best games on record, in the top 10 in april. That points to the dislocation of what we are seeing in the Economic Data and the strong market performance. ,e have seen the rally broaden but it continues to be driven by mega companies, large tech stocks. When you look at the valuations, they remain exceptional across tech firms. We are seeing apple, out in the first time in a decade with trying guidance, we see amazon concerned about being the hardest hit they have ever been. There is a divergence from what we are hearing from companies and the exceptional performance in the u. S. Stock market. Matt what are we seeing, what are you seeing in relation to the mliv question of the day, you are asking, will the euro related tois closely what the ecb does and has done, what answer are you getting . Laura what prompted this question was that the euro did surge yesterday, largely due to rebalancing in terms of building up an appetite for euros. We are saying the levels of the same after 12 hours, there is a question if they can keep this momentum. Fact thating the resuming operations are not targeted, that will allow the funds to be used to extend credit to mortgages. Some potentialng lift, but ultimately this is something Christine Lagarde a plan, andwe lack in Underlying Services there will be jitters on the political front because of the Bond Purchasing Program to reach its target by october. We will see further stimulus in the ecb in the absence of fiscal. Ultimately in terms of the euro against the dollar, it is more likely to be lower over the coming months. Matt thank you very much for joining us, laura cooper, bloomberg mliv macro strategist. You can get involved with our mliv question of the day, and give your answer any feedback on the ecb yesterday, that is related to the euro price. Coming up, we will talk more about the ecb stepping up its response to the Coronavirus Crisis by cutting funding costs it banks even further, but has refrained from boosting its bond buying program. Laura was talking about how there could be room for that later. We will discuss that next. This is bloomberg. With antivirals, the drugs that fight viruses inside your body. They stop the virus from replicating or infecting cells. A recent promising report from gilead, the company says it helped coronavirus patients recover faster than standard care. President trump has touted two antivirals, hydroxychloroquine and chloroquine, generics made by sanofi and novartis. There is limited evidence they work against the coronavirus. Two trials could have results this month. Next, vaccines, they are considered crucial to the pandemic because they create widespread immunity. They also take longer to develop. They must be proven to be extremely safe since they are given to people who are not sick. There are 70 vaccines in some stage of development. Companies developing them include johnson johnson, sanofi. U. S. Health officials are , it is beingccine tested on 45 patients, and there may be earlier results later this month or in early june. Finally, the indirect therapies, they do not directly treat the virus, but they help patients by mitigating some of the effects, such as difficulty breathing or severe inflammation. Matt for more, you can catch our special coronavirus on saturday at 2 00 a. M. U. K. Time. Bonds showed and immediate signs of relief after the European Central bank eased conditions on longterm loans. It also introduced socalled to loosen the flow of money. President Christine Lagarde sparked a bond rally when she said the ecb stood ready to increase the size of its asset purchases. Uncertainty high surrounding the ultimate extent of the economic fallout, growth staff,os produced by ecb gdp could fall by 5 and 12 this year. Depending crucially on the duration of the containment measures and the success of policies to mitigate the economic consequences for businesses and workers. Matt that was ecb president Christine Lagarde. Yesterday, a little more careful than she was in the previous months meeting. Joining us now is neville hill, chief european economist, Credit Suisse securities. Let me get your first overall take. I thought the meeting was interesting in that my reactions to the headlines changed over the day as the market dealt with it differently. But there was not a lot of new news there. Neville i think that is right, and to be fair people would have been foolish to expect a big shift in policy at the ecb this month, having seen a huge policy response through the course of march. That is where we are at in the policy response in general. March was about Central Banks and governments building this phenomenal policy architecture to deal with the crisis. We are now at this stage were Central Banks and governments are finetuning and improving the toolkit they have launched. That was pretty much what Christine Lagarde announced yesterday. It was some improvements on the existing. Matt why do you think she held back . Clearly the markets were expecting more in terms of the asset purchase program. We sell the euro rise to 1. 10. Why not fire yesterday . Neville i think that is likely because of the internal opposition to the size of the pandemic emergency. It is programmed much further at this stage. That is a lot left in asset purchase program. To that extent it is not urgently needed at the moment. Whereas i think the evidence we have started to see in terms of getting liquidity into the real economy through the banking system, the measures the ecb has already taken combined with government guarantees do seem to have a beneficial effect. Banks are making that more available, lending has picked up. Things like the tltros help that policy, and i think in terms of helping out the bond markets, at the moment the ecb feels they have done enough, and there is the benefit in not increasing the envelope at this stage, and hopefully getting european governments and the finance ministers to focus more on a rescue program or package, and that i think is what is needed in order to calm sovereign bond markets. Through, and there is the alphabet soup of this crisis which is more serious crisis. Previous walk us through the bank lending programs. Will it increase lending . Neville i think there is one s, acronym which is pltro which in plain english means the European Central bank will lend 2. 5 mmercial banks minus for around a year with no strings attached. That should allow banks to deal with the stresses that are built up in the euro area shortterm. But also give a good reason to borrow money for a year minus the 2. 5 , and by short dated italian bonds with a yield that is positive. That is what that scheme is designed for, but really the key point in its funding in itscture key plank funding architecture, it was last month the European Central bank took the radical step reducing the Interest Rate charges those banks below the banks. Rate it charges they cut that even further to 1 yesterday, and that means things can borrow for a few years from the ecb. It is important because the European Central bank is doing monetary easing through Interest Rates that should improve the profitability of lending to the real economy for commercial banks. Really increasing incentives for them to deliver liquidity particularly to the business sector that really needs it at the moment, and keep businesses alive and sustained through this period of lockdown. Matt these banks can get access to multihere loans for 100 basis points, how much are they going out in real economy form . Moment the the Interest Rates have been trending down for the last few years. Is this is can borrow at around 1 at the moment. What is interesting so far, we have only just started to get evidence on how these policy packages are working. We have the European Central banks lending this week with a survey how banks are seeing how they are performing, and what is interesting is you saw banks expect to ease Lending Conditions to companies over the next three months. Normally when you have a recession, banks are desperate to tighten Lending Conditions to businesses. The credit easing policies we have seen launched by the central bank and government do seem to be having the desired effects. Loans in march to business the across businesses across the euro area were up strongly. It is early days but it does look as if these policy mechanisms in terms of getting liquidity into the real economy have so far in the euro area been successful. They deserve some credit for that. Matt we will keep you with us. Neville hill, chief european economist, Credit Suisse aboutties, talking to us the great pandemic. Coming up, strategist expectations hit rockbottom among the highly volatile earnings season. We will look at the opportunities next. This is bloomberg. Welcome back to Bloomberg Markets european open. We are 36 minutes away from the cash trade in markets that will trade today. Most mentally europe will not because of the Labor Day Holiday. You will get the ftse trading in london and it looks like it will be a down day. Neville hill, chief european economist, Credit Suisse securities is still with us. Earnings season is predictably bad. Cases aren a lot of getting outright canceled. How long do you expect this to last until we get some visibility . Neville i think it is going to be difficult to get a huge amount of clarity until we had a good sense of when any form of lockdown or social distancing restrictions will be eased. And ultimately i think that boils down to over effective treatments or vaccines. I think we are probably past the absolute worst in terms of the Economic Data. Beenbly april will have the worst month for Economic Activity globally that any of us will experience our lifetime. It is the first of may today, and you look at measures of lockdowns in europe that are beginning to ease somewhat. The absolute crushing decline in Economic Activity in corporate revenues is almost certainly coming to an end from where we were at the start of the year. But what we are unclear of at the moment is that vshaped lshapedshaped and recovery in earnings, because ultimately it will depend a lot on how effectively and quickly governments can ease restrictions. We do not know yet whether we will start to see in countries like germany whether the lifting of restrictions leads to a renewed outbreak of the virus. If it does, we have a problem. But if they can keep the outbreak contained while starting to return some Economic Activity that has been shut down , back to being open again, then there could be a decent vshaped recovery from there. Matt i suppose the most we can hope for, keeping in mind that a vshaped recovery, is a vaccine. At that point we have to worry less about another outbreak and backchecking. Thank you very much, neville hill, chief european economist, Credit Suisse securities. U. S. G up, 1987 highs, the stocks have their best month in three decades, but still lower. This is bloomberg. Matt welcome back to Bloomberg Markets european open. 30 minutes away from the start of cash trading in the markets that are open. Most European Equity indexes are closed today for the holiday. And inon we see trading, the u. S. We will see trading as well. The u. S. Celebrates labor day on a different day. Stocks in america ended their best month in three decades on a slightly sour note on the very last day of trading. But it was awesome otherwise. Yesterday we got decimal Economic Data and corporate results reflecting the toll of the coronavirus, but everybody had priced that in for the past four weeks. The s p had hit a sevenweek high at the end of last month, the end of april. You see here the massive gain on the nasdaq, 21 . The news is more decimal, more than 3. 8 million americans filed for Unemployment Benefits last week, sending the sixweek total to more than 30 Million People. As u. S. Employment continues to be savaged by the virus, the fed lending to small businesses, designed to keep workers on payroll. Of the central bank is also widening its main Street Lending program to more borrowers as the revenue and employee limit has been raised by 50 . Jeanne asserafbitton, global head of market research, lyxor asset management, joins us right now to talk about what is going on in economies around the world, and how that will affect market. What do you think about the incredible unemployment numbers . We knew it would be bad, but did we know it would be this bad . Jeanne it is very difficult to make a proper estimate. Magnitude thatof is quite striking. You are bound to have a huge spike in unemployment. Magnitudeorder of that people have to assess. I guess that is surprising to most. That is why Central Banks and governments are trying to do their best to mitigate the damage. The point is exactly investors are paying attention to. What do Central Banks have in store to fight this . What do you think about the increases we saw from the fed . I know a lot of investors are moving back to the u. S. American investors are pulling their capital back home right now. Is the u. S. Wellequipped to deal with this kind of thing . Often the u. S. Has a way to get out of crisis, so that might be why they are driving back. Peoplelso some reflex have in times of uncertainty, which is being closer to home, in a way. I do not believe it is going to be much easier in the u. S. Than elsewhere, but i believe the decisions from policymakers easier some way in the u. S. Versus europe, because in europe you have to have some agreement. Damage is not as it could be in terms of education and fiscal stimulus, whereas in the u. S. If they decide on something, it gets a better chance of being done. Ofmulus is a key component what will happen in the second half of this year. In our view, that is the main focus. Or should be the main focus. Matt in that case do you think u. S. Investment should be the main focus, is that the case . Opportunities there are , we are somehow finding it easier to have a little more visibility toward what policy will be able to do. Think abouto you the possibility of a vaccine being created quickly . Yesterday bill gates was saying it could be as little as nine months or as much as two years. Youint at the viewers studied chemistry in paris, so you are not just in markets but looking at health care. Yes, but i am not sure i have the proper expertise. I would say everything i read from the actual experts is that it should be between one and two years. I guess this is something that is critical, but at the same a cure is something that will affect markets dramatically. At least in uncertainty we will know whether the antibodies test guarantees immunity or not. In liftinge critical , andockdown measures whether they will happen or not. And whether they will be sustained. We get ans rare economist, strategist, financial analyst who also has a masters in chemistry. You are bit of the Angela Merkel of the investment world. We appreciate your input. Jeanne asserafbitton, global head of market research, lyxor asset management, thank you so much rejoining us. Lets get the bloomberg first word news. Here are the top stories today from the bloomberg terminal. President trump is speculating china may have chosen not to contain the coronavirus. The president says he has seen evidence that a lab in wuhan was the origin of the virus, saying it is possible he got out due to a lab mistake. U. S. Officials say they are investigating the exact source, and china says accusations it released the virus from a lab are unfounded. In the u. K. Prime minister Boris Johnson is pledging a comprehensive plan to lift the lockdown. He will set out details next week on how businesses can get back to work, and he is suggesting people will be encouraged to wear face masks as the restrictions are lifted. The Prime Minister says the u. K. Is passed the peak and on a downward flow. The ecb has moved to ease monetary stress. It is introducing tltros pltros to ensure sufficient liquidity, and help loosen the flow of money. 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. Up next, world bank of Scotland Group will look to book a hefty charge as the coronavirus pandemic hits health and finances. We will cover banks for you. This is bloomberg. The challenge of course is that we do not know how deep or long the downturn will last, or the extent of the lockdowns. It is really difficult to predict outcomes with any certainty. This is true across all markets. When unemployment goes that high, we have reserved for what we anticipate credit losses to be. There is obviously worry in that range dependent on the duration and Economic Impact during the remainder of the year. That will bode well for credit. We are optimistic about the extent the losses will impact our future. Bank you hear there from executives who spoke to Bloomberg Television after a big week for european banks, First Quarter earnings released amid the coronavirus pandemic, and affected by the sudden stops and shutdowns. Royal bank of scotland is the latest it is bank to have a hefty charge as a result of the lockdowns, and the bank has set aside 802 Million Pounds for bad loans, 10 times the charge it booked a year ago. Joining us is bloombergs opinion columnist. What are the big themes that have emerged so far . Bad loans is right up there. Absolutely. Conservativebeing in their own division. If you look at the numbers we are seeing this week, you see the charge of 1. 7 billion pounds and a harsh view of where the economy is heading. On the other hand deutsche bank, only 500 Million Euros which potentially reflects a gdp scenario. Much of the pain has been frontloaded . How much will this go into next year . This is where you see investors differentiate. Matt what are the biggest concerns of executives . Is it a cascade of bankruptcies . I think you captured it quite nicely, a degree of uncertainty that lies ahead. Wealth management businesses proved to be resilient so far. First quarter jump. We are not sure where it is going from here. What you are seeing to some extent is the strength and weakness between bank models coming through. Wealth management is doing quite nicely. Our cleat is doing well barclays is doing well. You are starting to see strength and weakness coming through. One of the most interesting stories by Bloomberg News is how executives are talking about going back to work after the crisis. ,ne of the coolest threads unless you are long commercial real estate, is maybe these worker bees do not have to drown back up drone back up elevators. Everybody istely, starting to get back to work. Bankers is a consideration we have not thought about before. Branchese networks of are not working as much as they would like to. That is a really cool story. Thank you for joining us. You can check out her work and on your bloomberg terminal. Tumbled as theer economic fallout from the virus wreaked havoc on the groups advertising sales. The social media companys main sales are in advertising. Emily chang spoke to the cfo. We really saw two different time frames in march where we were off to a good start in the united states. We had a strong super bowl, and great things happening around the world. 31 we saw as to revenue down 27 . Our business is one that really benefits from our customers events, and the event that brings people to twitter where advertisers come to connect with customers around those event. As events were pushed out and canceled, it had impact on us. The second issue we saw, we are focused on our advertising. Advertising is sometimes less resilient during a more constrained economic environment like the one we find ourselves in today. This is a reminder of how important our work in advertising is, and why we elevated that to be the number one priority. Emily what can you tell us about april and what you are seeing . If Facebook Says it is flat, you have to share insights into what we can expect Going Forward . I will give you two thoughts, the first is it is incredibly dynamic, and for us to discern mayerns and articulate them put people in a position where they are making judgments on things that are anecdotes and not data points. We want to be careful about that. Secondly, we think march 11 to 31 gives people a good glimpse for what it is like for us to operate in this environment. We already in that timeframe saw advertisers pivot their campaigns. Instead of advertising quickbooks, they were advertising the gofundme they were doing for small businesses. You saw hyundai advertising a program where they were helping their borrowers who have lost their jobs. We have been working hard to help advertisers make this pivot. Some happens quickly and other parts take longer to play out. Emily the olympics are being pushed that, live sports are not happening, if that continues, does that hurt the healthy user growth we have seen . We definitely benefit from the events that bring people to twitter. The of those are like olympics or march madness, or other events that cannot happen or delayed because of the pandemic, but then things like the last dance that so many of us are watching on sunday night, or the concert that was all of the world couple weeks ago which are trading people together despite the pandemic. Audiencegreat opportunities for us, and ultimately give us a chance to have a larger audience that we can work with for longer periods of time to show the other great things on twitter. We think it is much more about the longterm than any particular event and how that might affect audiences. Matt that was bloomberg s emily chang. He referenced the last dance, which is the Michael Jordan series so many people are engrossed by. For europeans, Michael Jordan was a basketball player. We are minutes away from the open. We will get your stocks to watch, including rbs, the bank is putting aside 800 Million Pounds for bad loans. This is bloomberg. Matt welcome back to Bloomberg Markets european open. We are seven is away from the start of cash trading. In those markets that are open, london is trading. Most of Continental Europe is not. Futures are down more than 2 on the ftse. It could be a risk off day. One of the concerns is bank earnings, or Bank Provisions for bad loans. We saw numbers from rbs showing they were almost 10 times this quarter what they were a year ago in the same period. Some of your stocks to watch, joining us is dani burger. From rbs. Ly hefty the exact figure is 802 Million Pounds. They did not give an update on the forecast, calling it inappropriate to do so given how much uncertainty there is. Rbs is grappling with the fact it has a corporate business lending program, and taking part in the u. K. Government schemes. It is very involved in the Mortgage Market which has been struggling in recent years and has virtually vanished in the lockdown. We are seeing gains for rbs, according to morgan stanley, who say they be their expectations in terms of First Quarter trading by 3 . Their trading might help them beat expectations. The other stock to watch is ryanair. It will cut up to 3000 jobs, including pilots and cabin crew. 20 . Up to that will also be in the head office and back office team, in another sign of how dire the situation is. Boeing will cut the number of aircraft delivered over the next 24 months. When do things get better for ryanair . Of years from now, summer 2022, according to the company. Matt thank you very much, dani burger. Coming up, futures are pointing with and we will speak Michael Oleary, and interview you do not want to miss. We will talk about the future of ryanair and the future of air travel. This is bloomberg. There are times when our need to connect really matters. To keep customers and employees in the know. To keep business moving. Comcast business is prepared for times like these. Powered by the nations largest gigspeed network. To help give you the speed, reliability, and security you need. Tools to manage your business from any device, anywhere. And a team of experts here for you 24 7. Weve always believed in the power of working together. Thats why, when every connection counts. You can count on us. Matt tech troubles. Global stocks get dragged by big tech, with amazon predicting a possible loss in the second quarter. Apple is skipping its forecast completely. And more protections. The ecb tweets policy to lower banks to fund in economy lure banks to fund an economy in trouble. The rest of european markets for the most part are closed for Labor Day Holidays. Plus, capital is coming together. Apollo aims to raise 20 billion in several new funds for opportunities in distress and private debt. This after boeing sold 25 billion of bonds in the largest offering of the year. It will be able to, with that, avoid taking a government bailout. Now we have the market opening up right now, and i can say that singular today, because we dont have trading here in germany, nor in france, spain, or italy. It is mainly just the ftse that is open. Denmarks omx also trading today. Downndon, we have markets about 1. 5 , and you are going to see very few other equity indexes opened as most of europe is closed for the holiday. We will see trading in the u. S. Earlier today, so it is key to keep an eye on u. S. Features. They too are in the red. Lets get to a very important interview. Ryanair is cutting 3000 jobs after carrying less than 1 of its normal passenger volume in the fiscal First Quarter. The airline says it will challenge some 30 billion euros being handed out to european rivals, arguing that will distort competition and hurt the healthier carriers. Joining us is the ceo, Michael Oleary. Michael, thanks for coming on the program. I ame first ask, because sure labor is your biggest concern as well, how many jobs you are going to have left, how many employees you are going to have left, and what you will do if flying comes back after this crisis . Michael good morning, matt. Good morning to your viewers. We currently employ 18,000 people, so today we are announcing cuts of just over 15 . We are going to have to lose, regrettably, about 3000 crew over the next three or four months. That is because this year we are carrying less then 100 million passengers against unoriginal an original budget of a hundred 54 million passengers. 154 million passengers. We have never in the history of ryanair lost revenue in that quarter before. The situation is grim. We expect to be allowed by the government to go back to flying in july, july onwards. Of ourct to operate 40 normal program. Then we move into the winter schedule. Is awe are facing now historic decline in air traffic in europe for the next 12, 18 months. I do expect when we fly in july, traffic will be strong. It will be strong because the portugal willain, be discounted hugely to get people to move for what remains of the tourist season before schools go back in september. We think it is inevitable now, our business is going to be about a third smaller this year. We will take out about 15 of our staff with deep regrets, but there is nothing else we can do. Even the remaining staff will be looking at pay cuts of about 20 , and that is because the environment in europe has changed for airlines. The Strong Airlines going into the crisis, ryanair, easyjet, and others, were a strong lowcost operations and expected to emerge stronger. The people who went into it weekend, the Legacy Airlines, the ones who have been nationalized, are extraordinarily are receiving extraordinary volumes. These arepayrolls, huge distortions of the level Playing Field for the next three to five years. We will now be competing with Legacy Airlines who before could not make money, but now have so much aid they can afford to lose money for the next three to five years, and will do significant damage to airlines like ryanair, easyjet, and others. Think the strongest will now emerge as the weakest, unless we take the radical action we announced this morning. Matt matt do you have a strategy in place to challenge that state aid . Other than coming on bloomberg and speaking to investors who will largely be free market capitalists and agree with you anyway, you are preaching to the choir. At theyou challenge this state and eu level . Already spokeve with the european commission. We have to file with the ecj within two months. We have to go before the end of may. But the problem is going to be it may take six to 12 months to get the cases, which are a breach of competition rules. It will take 12 to 16 months to get it overturned, then what . Do you think the German Government will allow them to go . We dont. It has never yet happened in history. What we should have to do is take the very painful decisions that the free market has imposed on us in this crisis. We will survive, but we will survive as an airline with a lower cost base, and much lower pricing for the next three to five years. We will be a stronger airline at the end of this, but only by taking this radical but deeply painful surgery we announced this morning. Matt there are only a few household names in airlines. I would put you up there, branson as well, and willie walsh. Willie walsh is going to take state aid from spain. Does that make sense to you . I know that you know each other. Does that seem fair . Michael i dont think it is actually fair. Said they will not seek state aid, nor will it. I think it might be a different situation in spain and their subsidiary in ireland. The ireland government could not afford it. Think ba announced 12,000 jobs this week. They are doing everything they can survive without state aid. Air france, klm, era italia has been nationalized again. We are the Largest Airline in italy. Now we have to compete with air italia with the might of the italian state behind it. We will have a distorted market for the next few years. That means we will have to have fewer cabin crew. The remaining cabin crew will be paid less. We will be cutting corners in some places, where it could take a year or two years for the traffic to return. We also are real looking at our orders. We are in discussions with boeing about our aircraft orders because we need to right size the company before three to five years of very grim trading here at ryanair. Matt how many jets do you expect to defer from boeing . I think you were planning on 30 in 2020. You are going to revise that downward, i assume. What is the picture looking like there . Can you quantify it . Michael at the moment, we have 150 aircraft on order for delivery over the next five years. We have about 60 options on top of that. We would like to take some if not all of those aircraft. What we would be thinking about doing is grounding some of our older planes. They arrive with 16 lower fuel, 4 more seats. They will be more efficient in the future. Max is knows when the going to return . We are pleased to see boeing raising significant funds, which eliminates risk. But our focus in the shortterm is not aircraft. Our focus is reducing our already low cost in europe so we can compete for the next four or five years. These Legacy Airlines who have been receiving multibillions in state aid to help them against ryanair and other airlines for the next number of years. This is good news for customers and consumers. It does vindicate my view that air travel will return strongly through the end of 2020 and into 2021. It will return strongly on the back of lower pricing from airlines and tourism operators across europe, as long as we can have a vaccine after the pandemic. That weeks ago, i told you fewer airlines with a smaller number of big players in europe, we will emerge out of this with a whole lot of airlines receiving asset state subsidies to allow them to compete unfairly against us for the next number of years. Matt how do you expect to get people back in your planes, back flying . I am very happy that thinner seats you have in your planes allow me to have enough legroom. But i dont necessarily want to sit directly next to another person. You have said you are not willing to leave the middle seat free. Michael thats true, matt. No middle seat provides social distancing whatsoever. You are already two and a half feet away between the window and the aisle seat. The person behind you and in front of you is even less than two and a half feet away. You can have social distancing on an aircraft, in the same way you can manage it on a train or the underground. ,e need different measures which would be temperature checks at the airport. Anyone with a temperature higher than 38 degrees will be have reduced entry. People will have face masks, air traffic sanitized daily. I think that would prevent covid19. London cannot run the underground or Train Service with social distancing measures. There is no social distancing and enter plate terminal an airport terminal. Temperature checks and disinfectants are the way forward. That is the way the Asian Airlines have already returned to Flight Services over there. The Chinese Airline is running out about 70 of their precovid schedule. I think the numbers will bounce back because the airline will engage in aggressive discounting, with the benefit of 30 billion in state aid. We will be discounting it. There will be lots of price benefits for passengers. We will all be taking precautions with temperature checks and face masks. The average flight duration is one hour. Anye will be no covid 19 in flight if these measures are taken. Tailwind isch of a the drop in oil that we are all watching with such amazement . How much of that can you translate into a tailwind for ryanair . Situation bazaar the bizarre situation, it is like a poisoned pill. We were hedged out through march of 2021 at 61 a barrel, which was less than the 72 dollars a barrel. Now we are having to provide for hedging because stock prices have fallen to 25 a barrel. For the remainder of this year, that will come to about 300 Million Euros, even if based on our existing program. Willwe get into 2022, it be a huge headwind for those airlines that survive. But again, our concern today is while we benefit from lower oil prices, we benefit from some airports returning to services, we will all be competing with one hand behind our back in europe because lufthansa will have state aid, air france will have state aid. They will be able to dump pricing for the next three to five years. Make our livesly very difficult for the next couple of years because the eu is not protecting free and fair competition. It is allowing National Governments to dope up there failed Legacy Airlines. Matt michael, thanks so much for spending time with us. We appreciate you coming on. Ryanairs ceo Michael Oleary. Coming up, with earnings showing Many Companies reeling from the lockdown, how do you invest in such an unprecedented environment . We will put that question to our guest next. This is bloomberg. Matt welcome back to Bloomberg Markets. This is the european open. We are 17 minutes into the trading day. Not trading quite as much because most equity indexes across europe are closed, but the ftse is open and down 2. 5 after an amazing april. U. S. Markets are also looking at futures trading down. The import capital chief economist. Does the state of the economy really justify what we saw in markets last month . April wasnt saying. The nasdaq was up 21 and change, and yet these sudden stops have left us with so much uncertainty. We are not even getting a forecast from apple. Guest you are absolutely right. I think as far as data releases are concerned, the next couple of months we will get dire data. The worst forecasts out there. But i am an optimist and i believe in human nature and i believe in the resistance of the human being, and the fact that we will get out of this. I think we need to look ahead to the next two to three months. We see austria and germany at 80 recovery ratios from the confederate covid19 cases, similar to korea. I think we need to start being optimistic. One of the media headlines i saw was that one Million People have recovered from covid19. We need to start being positive and look to the future now. Matt what about the jobless numbers . Those are difficult to be positive about. I think more than 30 Million People in the u. S. Have applied for initial jobless claims in the past few weeks. In germany, more than 10 Million People are getting paid by the state instead of employers in the program. How well do you think the state aid and social safety nets are functioning . Simon i think they are functioning very well. A lot of Smaller Enterprises have been supported by the therams, and in some cases, cost may be lower than what they are taking in and what they are being paid to the employees of the companies. These are unprecedented amounts of spending that we are seeing by governments, which is very good. Wepared to previous crises, did not see it in the ppe. Fiscal of this massive spending and capital injections from Central Banks everywhere, we have seen equities picking up over the last few weeks. We have seen negative releases coming now. Developedforget, economies, 60 to 80 are service sectors. Service sectors are the ones that have been hit the most with aviation, hospitality at the top. I have no doubt that once we get out of this and start exiting this lockdown that we will start to see Consumer Spending and we will see a pickup in a vshaped recovery. Matt simon, you are a doctor. In thedied economics capital of free market capitalism in vienna. Let me ask you what you think about Michael Olearys point that it is unfair for the weakest in an industry to get these huge state bailouts, and it sets up a real hazard . How do you see that working out . We arelets face it, sitting in an unprecedented economic collapse, dealt a blow by a virus which crosses every single border. There is no stop and any border, and obviously the Aviation Industry has been hit the most. Onn you look at any Service Middle sized and large enterprises, they will show you that aviation and Hospitality Industries are being hit the most now. Intervention is concerned, we need it. Without it, things would collapse. I believe companies which are like ryanair, they have a lot of innovation. There is going to be a big change in the Aviation Industry. A lot of people are going to look at the environment. We will be seeing big changes in that. Just look at the weather in the last three or four weeks. I have never seen anything like this in the u. K. There will be a big change in thinking as we move ahead. I think Companies Like ryanair and other companies will be moving ahead in the right direction. Matt now is not the time to ask what would high back to. Gemcorpijanoevans, capital economist. I hope we get you back on the program soon. Coming up, european firms are more than halfway through the tumultuous reporting season. They may have another couple of tumultuous reporting seasons to come up. We will look at earnings thus thein the stud and in sudden stop, the economic shut down. This is bloomberg. Matt welcome back to Bloomberg Markets. This is the european open. 25 minutes into the trading day, and most equity indexes in europe are not trading today. It is the Labor Day Holiday. Normally you would see the massive riots kicking off behind me here in berlin, but because of the pandemic we are not going to see as many demonstrations as we would. The market is open in london. The ftse is down 2. 5 , but it has to be said that april was a fairly great month for equities globally. In the u. S. , we also see equity indexes down. In terms of the big movers today, we have ryanair. We were talking with Michael Oleary just a moment ago, and he was explaining the decision to fire 3000 people and his concern with the state aid going to his weaker rivals, in the way he would describe them. You have Royal Dutch Shell out after the dividend cut yesterday. They are falling again today. And rbs putting aside 800 Million Pounds for bad loan provisions. That is almost 10 times what they did a year ago in the same period. But you can see the shares are actually up 4. 3 . Coming up, virus hit tack. We see how apple and amazon fared this quarter, and whats next. This is bloomberg. Welcome back to the european open. 30 minutes into the trading day right now, and it is a bleak day for the markets that are open. It is the may 1 Labor Day Holiday on the continent. But in london, equity indexes are trading. You can see here throughout the day, it has been down, right now 130 points to 57. 71. A loss of 2. 2 . Two days in a row of losses for the ftse index. Yesterday, we had the index drag awn by Royal Dutch Shell, loss yesterday. Today, it is adding to that, Royal Dutch Shell down again today, adding to that. You can see here the biggest losers, easyjet edging it out, off 5. 8 , but shale down 5. 6 , glencore down 5 . In terms of the winners, they are few and far between. In fact, i can only see five actual gainers here. Rbs and sand char are the only gainers we are singing today on the ftse 100. Lets get the bloomberg first word news. Here are todays top stories from the bloomberg terminal. The Federal Reserve is expanding the scope of its main Street Lending program. Now businesses with up to 15,000 employees or up to 5 billion in revenue will be eligible. Central bank is also expanding its paycheck protection facility after the initial round of funding was spent in less than two weeks. President donald trump is speculating china may have chosen not to contain the coronavirus. The president says he has seen evidence that wuhan a lab in will hunt was the origin of the virus, and got out. Due to a lab mistake u. S. Intelligence Officials Say they are investigating the source of the outbreak. China says accusations. Are unfounded. In the u. K. , Boris Johnson is pledging a comprehensive plan to lift the lockdown. He is going to set out details next week on how the businesses can get back to work. He is also suggesting people be encouraged to wear face masks as restrictions are lifted. The Prime Minister says the u. K. Is past the peak of the disease and is now on a downward slope. Spend aciences may billion dollars on its new covid19 treatment this year alone. How much revenue can it generate . Gilead said it was too early to discuss a potential outlook. It is giving away the first 1. 5 million vaials of the drug. They say they plan a sustainable model for patients and shareholders. 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. Lets talk tech now. U. S. Giant amazon, apple, and twitter have taken a hit from the coronavirus pandemic. Says theceo jeff bezos online retailer may incur a loss in the Current Quarter to keep logistics running smoothly. Apple has skipped out on giving a forecast for the first time in more than a decade as it reported quarterly revenues that grew just 1 . Ceo tim cook says the firm saw a pickup in april, and the virus wreaked havoc on twitters source of revenue, advertising. Sales rose there just 3 in the First Quarter, the smallest increase in more than two years. Joining us is amanda lyons. Thanks for joining us. Lets talk about amazon first. I think i, like a lot of people, have been practically living off of amazon shopping recently. How is it possible they are losing money when everybody is taking to the web to buy stuff . What is quite interesting is where people are spending their money on amazon. We are seeing a big increase in grocery shopping, which is very low margin. That is an entry point for amazon to gain new customers when looking at the longterm. It is an Incredible Opportunity for them to expand their reach and start up selling their prime subscriptions and the amount of products people by. People buy. We have seen that prime consumers spend more than double, so this is a great opportunity for them. We also heard last night on the call that amazon is spending a lot of investment in the safety for their employees, but also trying to meet the incredible demands. They are one of the few companies out there that are seeing unprecedented demand. This is like a Holiday Season level of demand for them, but without the multiple months of ramp up. The fact that they have managed to grow revenue at 26 and see that acceleration this quarter is quite a testament to how quickly they are able to move. I would anticipate looking into q2 that we should see an acceleration of their growth. That is certainly what they implied in the guidance, which to some extent was conservative. Matt how sticky is this behavior . In other words, after the lockdowns are lifted, are we all going to go back to stores and stop throwing everything in our prime baskets . Or are there some behaviors you think are going to last . Is going toink this be some lasting behaviors. We are going to see changes to the consumer and the way the consumer looks at the world. They are not going back to the way they were precovid. In the u. S. , amazon had been wanting to increase their penetration into Online Grocery. This will be the catalyst. Some consumers will go back to their precovid habits, but a vast majority are going to see the benefits of Online Shopping and Online Grocery shopping, and increase their usage of services, particularly amazon. And once they start groceries, as you were saying before, it is quick to adding on additional items and soon you have an amazon delivery coming to your home on a daily basis. Matt we heard how great for apple the Online Shopping has been, or was in the quarter. Ofannot believe the closure apple stores is not going to leave a mark. I am used to going into an apple store and picking up what i want, when i want it. At least here in berlin, it has been closed and still has not reopened. I am finding alternative places to buy my electronic needs. Is that going to hurt apple later on . Amanda apple has an interesting model when it comes to retail. Their stores, i am sure if you have been into one, is not just about selling the products. They are selling experience. Their sales teams are there to help you understand the products rather than just trying to push you into the sale, and you regularly will see an apple store full of people not necessarily buying. This is a long path of conversion for them. I think a shift to online in the longterm would hurt apple. I think they rely on their stores and it is important for them to get their Retail Operations back up and running. Their online sales were an improvement compared to expectations, but they do need to get the fiscal Retail Stores backup and running to see a boost in sales again. Matt are the supply chain issues going to hit apple harder than others . Amanda what was interesting on the call last night, apple said they did have some supply chain issues earlier on in the quarter. Obviously, china was hit by the covid crisis back in january and february. Talk of the apple supply chain being hit is something they have been speaking about for a few months now. They did say that by the end of the quarter they were back up basically atnd precovid levels of capacity. I think the disruptions have been worked through, and i dont see that being a major concern for them Going Forward. I think theyre bigger concern is going to be demand, particularly as many of their products and their flagship products are very expensive, as we are heading into a recession environment. Matt amanda, thanks for joining us. Amanda lyons, investment manager in gams disruptive growth and technology team. Very interesting stuff, certainly in tech. The recovery in the nasdaq has been stronger than Everything Else in terms of the u. S. Equity indexes. But today, it looks like, at least if i check out my futures screen, the nasdaq is getting hit harder than Everything Else. Nasdaq futures down 2. 8 as we speak. In terms of health care, gilead is caught between making a profit and treating the world well, as the drugmaker is spending 1 billion on work on its covid care. How much are wondering revenue the Company Expects to generate. We are live from new york next. This is bloomberg. [laughter] lets start with antivirus. They other drugs that fight viruses inside your body. They stop the virus from replicating or infecting cells. There was a recent promising report from a trial of remdesivir. Iliad says it helped run a virus patients recover faster from standard care. Meanwhile, President Trump has touted two antivirals that have been used to treat malaria, hydroxychloroquine and chloroquine. They are generics made by tampa pharmaceuticals and novartis, among others. There is limited evidence they work against the coronavirus. Two trials could have results this month. Next, vaccines. They are considered crucial to the pandemic because they create widespread immunity. They also take longer to develop. That is because they must be proven to be extremely safe so they are given to people who are not sick. There are 70 vaccines in the stage of some development. Companies developing them include johnson johnson, santa fe in conjunction with glaxo smith kline, and no via. A vaccine is being tested on 45 patients. There may be early results late this month or in early june. Finally, the indirect therapies. They do not directly treat the virus, but they help by mitigating some effects, such as difficulty with breathing or severe inflammation. Roche is among the Companies Making these drugs. Matt for more, you can catch our special saturday. If you are in the u. K. , unfortunately it is at 2 00 a. M. During the lockdown, the chances of you being awake at 2 00 a. M. Are the same as the chances of you being awake at 2 00 p. M. If you are in the English Speaking western world, you should not refer to the World Health Organization as the who, as that name that is reserved for the legendary rock band. W. H. O. , orust say the w. H. O. Or the World Health Organization. They are important, but not that important. Gilead may spend 1 billion on its breakthrough new treatment for covid19 this year alone. Details from the u. S. Government study in a separate trial conducted by the company itself suggests remdesivir may become the first medication approved to treat the novel coronavirus. But investors are wondering how much revenue the Company Expects to generate from that. New york isrom annmarie hordern. A lot of excitement about this story. How close are we to seeing fda approval . Annmarie very close. Thequick point on the who, jury is still out. We are close to gilead getting the approval. Matt hang on, you call the w. H. O. The who . Annmarie we did in the model you and days. Lets get back to gilead. This story is pretty incredible. We will see fda approval very soon. That is what dr. Anthony patchy faucin nbc dr. Anthony said on nbc. Gilead was out with results yesterday. We know they will spend 1 billion on remdesivir. They will distribute the vials of the drug to patients. We heard on the earnings call, investors, analysts who comb through these numbers want to know what this revenue will look like. They said it will be controversial, but what is the return this will generate . They said it was a point well taken. There is no rulebook right now. They will provide access to the medication to patients that is sustainable for company and shareholders. They did mention it is too premature right now. It potentially sets them up for an interesting line they need to walk, providing the drug for patients but at the same time providing profits and revenue for their shareholders. Annmarie hordern, just a quick run through of how the is, in terms of infection rates and thats, is there a little bit of hope . Annmarie there is a little bit of hope. Flattening the curve is what everyone is saying. Those cases increased 1. 2 from the day before. That is under the 3 average we saw last week. But i quickly want to point out, some states are seeing increases. New jersey is one of them. Texas reported a higher death toll. And california, their cases rose, the biggest oneday jump in new infections. When you look at some of the details, some of these states are seeing things get a bit worse. Matt annmarie hordern, former model u. N. Diplomat, and now intrepid bloomberg reporter. Lets get to the Bloomberg Business flash. Here are todays top corporate stories off the bloomberg terminal. Royal bank of scotland is looking at 800 Million Pounds charges for bad loans. That is almost 10 times the amount it set aside in the same period a year ago. Did not give an update on forecasts, saying the outlook remains uncertain. Crisiss approach to the is from a position of strength. To focusays rbs plans on its strategic fireworks. Andair is cutting 3000 jobs plans to carry less than 1 of its normal passenger volume for the quarter. It does not expect a full recovery until december of 2022, at the earliest. Someir will also challenge 30 billion euros in state aid being doled out to save its competitors. It says the money will distort competition and hurt the healthier airlines in the industry. Amazon is telling investors to hold tight as the ecommerce giant navigates the hardest time it has ever faced. ,mazon saw its profits shrink and said it may incur a loss in the Current Quarter due to spending key operations. Operating incomes could range ofm 1. 5 billion to a loss 1 billion even. That is your Bloomberg Business flash. Next, will the euro see a dollar 8 or a dollar 11 . We put that question to Kristine Aquino next. This is bloomberg. Welcome back to the european open. Right now, we are almost an hour into the trading day, and you are seeing the ftse down 2. 3 . Equity indexes in the heart of europe is closed for the may 1 Labor Day Holiday. They are trading in the u. K. , and we will be training in the u. S. Later. You saw u. S. Futures down as well. We could see the second day in a row of drops after sobering news from tech giant amazon and apple shook asian stocks and futures. Joining us is Kristine Aquino, who leads our mliv team. I was talking to your colleague laura cooper about it this morning. We say it will be two days of drops as if it is such a dire thing amidst this sudden stop. I think it is the best we can hope for, especially after such an incredible april. April was so great for global equities. Kristine exactly, matt. Fascinatingly so. It is still an ongoing debate whether stock markets are correct in being this optimistic when other markets are diverging from that and still retaining some of the risk off labor we have seen. That will be this debate that will push forward market commentary in the next quarter or so. Divergence, whether that can be sustainable or if one is in lieu of the other. It is a question whether they are stocks that will decline to match the pessimism that we still see in bond markets and in commodity markets. Or whether it is those other markets that will rise up. Best to take a longer term view. But as reporters watching markets, we are forced day in and day out, minute in and minute out to watch market moves and think about why. When we see these red arrows, are you writing, it is because the fed and ecb have not met expectations . Kristine it really is difficult to ascribe every Single Movement to these big picture stories. I think you are right. The minute by minute commentary is something we will have to take with a grain of salt because it is hard to pin one big driver for all the moves. Are i will say is there still the policy implications that the fed and ecb have implanted. That is still running to the course of markets. I would call attention to the ecbs move yesterday. In a lot of ways, it is groundbreaking because some of the moves they did yesterday were being called self rate cuts by our colleagues in the Bloomberg News room. They really shored up the capacity to whether this crisis. Crisis. Eather this that is not something that would sustain markets every minute of the day, as we are bound to see some fluctuations. But if you look at the policy as a whole, it is a big deal. Whyould be argued that is we are seeing less of a decline than we could have been without it. Matt christine, thank you for joining us. Kristine aquino, who leads our mliv team for us in europe. Thats it for the european open. Stay with Bloomberg Television. Up next, you will see bloombergs surveillance. I am heading to the radio studio. You can tune in on dab digital radio. This is bloomberg. These days staying connected is more important than ever. So were working 24 7 to maintain a reliable network, to meet your growing internet needs. Were helping customers who are experiencing Financial Difficulties stay connected. Were increasing internet speeds for low income families in our internet essentials program. And delivering selfinstall kits to your door. Nos comprometemos a mantenerte conectado. Were committed to keeping you connected. For more information on how you can stay connected, visit xfinity. Com prepare. Francine u. S. Stocks posted best month and more than 30 years but starting in negative merit negative territory pewter. Our interviews coming up shortly. Chief executive jeff bezos says the outbreak is the hardest time he has ever faced. The Biggest Discount airline cuts jobs. The chief executive tells our