23. 60. The other big news today was adp employment. 20. 2 million jobs lost. Interesting to see the crude market and the equity market going in two different directions. In europe, they are not here in europe, they are not. The pound is also trading down by around 0. 5 . We get an announcement sunday on lifting the u. K. Lockdown. Brent down by 3. 5 . We are seeing incredibly grim data from around the world. The European Commission economic forecasts were absolutely horrible. The services pmi data was absolutely horrible. It just continues to come and come. Obviously, we are waiting to see what we are going to get friday. The adp number not exactly a great story. It looks like the unemployment number friday is going to be horrible as well. Vonnie lets get to our first guess on this right now. With states lifting restrictions and President Trump insisting the economy has to reopen, even at the risk of more infections, we are seeing really deplorable jobless numbers. Look at the chart dustin the last few weeks alone. Just inet the chart the last few weeks alone. Awaitingid, we are numbers on friday. We are joined to discuss all of this by jennifer lee, bmo Capital Markets senior economist. Ofking today about many these jobs that were temporary layoffs turning permanent. What is the percentage that you perceive that happening for, and can the u. S. Withstand such longterm on it limit . Longterm unemployment . Jennifer good morning. I dont think anyone can put an actual percentage figure on how much of this is going to be temporary. I think it is still too early to say. Thesefter hearing all of terrible numbers of late from the ism surveys, auto sales being slashed in half in april, i plunge in retail sales, manufacturing activity, and of course, all of the jobs data, even withstanding all of that, i am still slightly more optimistic now that i have been in a while. Thee it is because longest month ever is now over, but despite all of this terrible data, we are still hoping that a lot of this is going to be temporary. We are still expecting a robust recovery to unfold in the second half of this year, and it is going to take time before demand and jobs were torn and jobs return to previrus levels. That is not going to happen until may be the end of 21 at the earliest. Vonnie what are you basing that return in the second half on . Can we ramp up the job creation we need in order to reverse the destruction . A lot lot of jennifer of this is temporary. Up until recently, we talked about how critical it was to keep an eye on the lockdown. That is why we are seeing all of these horrible numbers of late, because if nothing has been locked down. The doors are shut, the lights are turned off. When they are lifted, that is going to help determine how quickly or slowly the recovery begins. It all goes back to reopening the economy. Youe reopen too quickly, run the risk of having that second wave of virus hit. But theres obviously an incredible amount of pressure from all angles to open up. I think it is also interesting to look at what happened in china. They are first country where the virus hit. They are also the first to release their First Quarter gdp numbers, a huge hit down, almost 7 yearoveryear. Or interestingly, even though they started opening up, the latest numbers have already been quite weak. It shows that just because your economy opens backup doesnt mean that things are going to snap back to normal just like that. Lets carry on this conversation and talk more about it. How certain are you that we are going to get this recovery . Im hearing a lot of people talking about a rolling situation where we open, close again, reopen. Labor is going to be spending a lot of time distant from each other, and as a result of which, wont be that efficient. The effects of this are going to last quite some time. You are taking a reasonably positive economic picture. How fast does it tailor the other end . Walk me through the economic consequences there. Certainly notre calling for a vshaped recovery, not by any stretch. Our base case is still for a ushaped recovery, but i am not saying it is going to be a thin u or fat u. There is still the risk of a or whateverl or w letter of the alphabet you want. I would not discount that probability. There is the risk you jump the gun and get that second wave of coronavirus, which would be devastating for the u. S. And for Global Growth for sure, but at the same time, if you wait long tou wait too reopen, you risk of those temporary closures becoming permanent. Those people who thought they were just laid off now totally without a job, full stop. That is what the risk is. Our base Case Scenario is that this is temporary. Things are starting to open up, and that is why we are becoming more optimistic. As soon as things start picking up, you will see people going back out into the streets. It may not be pouring into the streets. It will be cautious. That is why we think it takes a while before we go to precovid levels or something close to it, at least until the end of 2021. Secretaryreasury once done off a lot of debt, and it looks like the deficit to go even higher. Is that a cause for concern . Jennifer it is definitely a cause for concern. At the same time, i am going to have to say, what other choice does everyone have . Everyone around the world, all countries are running huge fiscal deficits because they are trying to save the global economy. Thats exactly what they are trying to do. If they held back anymore, youve got huge risk of having your economy going into the deepest recession ever. It will be very difficult to dig themselves out of. I will go back to the question of what other choice do they have but keep spending. Vonnie will there be enough appetite to soak up all of this debt, though . This funding announcement at 96 billion, plus another 20 billion in 20 years. Jennifer theres still people buying debt. Several banks are out there, obviously, buying up tons of debt or get of course, the fed, everyone else, the bank of. Anada, the ecb but there will be appetite. People want to get their money somewhere, and right now bond have either that or cash. Vonnie does the market feel any pain from this . You say we can issue as much. Ebt as we want is there a breaking point, or can we continue to do this . Five years ago, you would have thought we would hit the breaking point now. Again, the whole point right now is to cushion the economy, get people back to work. Just keep people back to that path of where we were before before this pandemic hit. I guess we will have to figure it out later, how everyone is going to pay for this. Just to return back to where we started about employment, how bad do think fridays number is going to be . What do you think the longterm run rate is now of u. S. Unemployment, relative to history, relative to where we were before . How bad is it going to be, and what kind of numbers are you pretty thing the next few months . Jennifer just judging by what we have seen from initial claims, we got almost 30 million unemployment,for so we are looking for about 21 million it is going to be huge because we already see it this morning. I cant even fathom this right now, but that is what we are looking for. We are looking for the jobless rate to basically quadruple to 16 . I think one of the fed officials yesterday was saying or one of the government officials was saying it could be north of 15 . Again, we are seeing this as temporary. Jobre looking at the losses to stay in doubledigit territory, and this is obviously a number we havent seen ever, really. By the time we get back to something in the area of 4 or so, which is where we were ,efore this whole thing started or roughly, it is going to beyond 2024, 2025. Vonnie think you for all of your time today. That is, bmo Capital Markets senior economist that is capital lee, bmo markets senior economist. Lets check the first word news. Heres ritika gupta. Ritika President Trump told a crowd in phoenix people should to theirturning normal lives, even if that means more sickness and death. He is also disbanding his Coronavirus Task force that has steered policy thus far. Says pompeo has no evidence for his claim that the coronavirus escaped from a lab in wuhan. Chinas Foreign Ministry called the attack an Election Year strategy. A spokeswoman pointed out that the who says the virus could not be manmade. House Speaker Nancy Pelosi wants democrats to move first when it comes to the next stimulus package. She is looking for leverage in negotiations with senate republicans. The gop is trying to put the any aid. A warning today from the European Union executive arm. The e. U. Is facing the deepest economic downturn in its history , and that threatens the future of the Euro Currency if it is badly handled. 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. Im ritika gupta. This is bloomberg. Thanks very much, indeed. What are we going to talk about next . Disney taking a huge hit. Clearly, disney plus is one area that is positive, but pretty much Everything Else has been negative. Actually in some ways relatively well behaved this morning, but isaac and c, yeartodate, the numbers down quite sharply but as you can see, yeartodate to date, the numbers down quite sharply. Analyst alexia quad rani will join us later on to talk about what is going on in the entertainment sector. This is bloomberg. Oomberg. From london, im guy johnson, with vonnie quinn in new york. This is bloomberg markets. Lets find out what is happening with the markets. Taylor riggs is here with more detail. Taylor we are looking mostly green on the screen, with u. S. Equity markets up for the Third Straight day in a row. This as more talks continue about reopening the economy. A lot of improvement on the vaccine and testing front. Tech has really been the leader in the past few days, though you can see the s p has now turned positive. Crazy as it sounds for the year, the nasdaq only off less than 1 or so. Emerging markets getting a boost with more risk on town then recently. Flipping of the board, new treasury supplies coming online , so youre getting a big resteepening of the curve in the twos intends. The treasury plans to sell about pointy billion dollars about 20 billion, so youre getting more supply on the end of that curve, creating the steepening we are seeing. Theres some general risk on tone this morning with the bloomberg dollar strengthening. Gold weaker, copper stronger. Finally, some individual stock movers we are watching. Big news for abbvie. It won approval to take over allegan in a more than 60 billiondollar deal. ,ctivision and Electronic Arts both seeing an influx of new players as people are home gaming. With physical stores closed, all of these companies have increasingly turned to game downloads, and those skyrocketed. Vonnie taylor, thank you. It is time for the latest Bloomberg Business flash, a look at some of the biggest stories in the news right now. Shares of gm up more than 5 . Gm reporting betterthanexpected Quarterly Earnings. Sales of new pickup models , which helped gm pilot more than 33 billion of cash to see it through the crisis. We will hear from the cfo later this hour. Uber reducing its workforce by 14 , and more cuts likely. That is 3700 jobs that will be eliminated in the first round of cuts. Most of those will be in support and training. The ceo wrote in an email to staff that ridership is down significantly since the start of the coronavirus pandemic. U. S. Antitrust regulators have signed off on a 63 billiondollar deal, tearing the way for abbvie to acquire botox maker allegan. Free toanies are resolve competitions by selling for crohnsent disease. That is your latest Bloomberg Business flash. Still ahead, we will hear from randall woodfin, mayor of birmingham, alabama, as his city begins to reopen. This is bloomberg. Taylor this is bloomberg markets. As we were mentioning, sort of a risk on tone, and as we have been continuing, some of that optimism has been deteriorating. As you can see, we are now just a low bit flat to lower on the markets. I want to bring in the mayor of birmingham, alabama, mayor randall woodfin. Great to have you. I want to provide some statistics for our viewers to set up the stage. Alabama is looking at about 8000 cases, with about 300 deaths. Given that statistic in the backdrop, you are really you are looking at reopening the economy on may 1. You are requiring everyone in the public as well to where face masks. How is the reopening going . Mayor woodfin first, thank you for allowing me to be on. What i can tell you is here in birmingham, we have tried to strike a balance between the Health Crisis on the economic crisis. Plan the white house submitted to mayors and governors across the nation are tracing onking, symptoms and hospitalization. Birmingham is not out of the woods, so i think our approach that theas been governor is going to ease restrictions and allow more retail to be open, knowing that people must do social distancing and be six feet apart, then the facial covers were implemented because we still have Community Spread and we need to solve for how we protect people. Taylor what are some of the Small Business is telling you about some of their concerns about reopening, and also the ppp program and how effective it may or may not have been . Mayor woodfin as it relates to some of the businesses, the concern is this. It is Consumer Behavior. We know that 70 of our residents dont feel safe going out of their homes to shop. Are not of businesses even comfortable opening up without a Clear Strategy for testing and tracing. As we continue to listen to our health experts, we share the information we have with our Small Business owners, and we are taking every caution to build confidence. We understand that longterm economic success depends on people feeling safe. Right now, based on what ive told you, 70 of residents dont feel safe, so we still have to build out a way to Consumer Behavior backup towards a positive trajectory. As it relates to ppp, unfortunately we know that minority owned businesses cannot take advantage of the programs the way we want them to because they do not have a longstanding relationship with an existing lender. For us locally, what we did was forge a partnership between Goldman Sachs and the credit union, making sure that businesses who had nonprovisional relationships could apply for the second round. F ppp taylor it looks like birmingham just the cut off for the population needed to qualify for the feds Municipal Liquidity program. If you dont qualify, our human talks to help your budget deficit . What can you do to help ease some of the liquidity concerns that you could be facing in the coming years . Right now, we are investigating liquidity options that would be useful and hopeful to our state. Here in birmingham, we are like many other cities across the country. We are projecting a 25 to 30 loss in annual revenue due to decreased sales and occupational taxes. Our priority has to be preserving our services and protecting employees. All pleass to keep employed, but i have to look at things and evaluate programs to cut excess positions, as well as unfilled positions. The bottom line is we want to preserve jobs. We want to stabilize and come, and we want to continue to provide services. So when Everything Else is so chaotic, people want to hold on to what is normal. That means seeing your trash pickup, your streets swept, and your post offices on their normal route. We will continue to do this things. Taylor thank you for joining. This is bloomberg. Staying connected your way is easier than ever. Youre just a tap away from personalized support on xfinity. Com. Get faster internet speeds with a click. Order xfi pods to your home in a snap. Or change your Xfinity Services with just a touch. All in one place. Youre only seconds away from all of that on xfinity. Com. Faster than a call. Easy as a tap. Now thats simple, easy, awesome. 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. Vonnie live from new york, im vonnie quinn along with guy johnson in london. We are awaiting crude Oil Inventories for the last week. Futures are down about 5 and still trading at 23. 34 per barrel. Looking for build so we will see what it comes in at. Was 8. 9 Million Barrels. We are getting 4. 95 Million Barrels of billed so that would be a little bit of a relief to those looking for storage out there. Down,ories were a draw three point 3. 15 Million Barrels. Refinery utilization was at 4. 5 . A little bit of a recovery trading above 24 a barrel now. Badey got a glimpse of how the coronavirus outbreak would be for the Worlds Largest entertainment company. They said it cost them 1. 4 billion in profit last quarter and this quarter is expected to be worse. By a j. P. Morgan analyst. What were your expectations and is there a way for disney to make up as lost . Absolutely, the expectations came in roughly in line with what we had planned. We had been looking for roughly 1. 2 billion in losses. I think with the guidance they gave us on the call, it was pretty close to that. The firstbillion for week of march because they hadnt had a chance to cut costs but then the burn rate looks like its close to 1 billion per month. They are doing better than expected going forward. I think thats the focus right now for many of the investors looking at the stock because it is influencing the nearterm numbers so dramatically. Overall, the other surprises on was the disney subscribers increased which is encouraging and they suspended the dividend but thats more because of perception of not handing out checks to losing 100,000 shanghai the parks but disneyland is opening up next week and not a lot of clarity and when the rest of the parks will open. Vonnie the consumer has been severely scarred either way. Later,pen sooner we open it seems like there will be a longterm impact on Consumer Behavior. We hear that every day from mayors opening cities and so on. Will we have to reopen everything before disney can recoup these losses or do they have a plan to offset these losses . No question it will take a long time before we see the carnage we have seen in terms of park closures and getting the numbers back to where they need to be. We are talking couple of years so it will take some time. Not the parks open, its going to flip the switch and go back to normal. There will be reduced capacity for some time and the same thing for the Movie Theater business. You have this transition period when we are recovering but not recovering completely. Folks see the if recovery, i think the focus of the stock becomes less how much are the parks worrying about financials and the incredible content story and the meteoric rise of the digital scene we have been seeing. Guy let me pick up on a couple of points. The stock is up by 3 today. To be honest, i am stunned by that given what was said on the call and the fact that this quarter would be worse than the last quarter and it will be a long time to we open the parks. I appreciate the fact that the market is a discounting mechanism but are you surprised the stock is up by 3 today . I am a little surprised. I was very bullish on the stock. What we have been saying is this is more range bound until we get more clarity on signs of reopening. I think expectations have been so negative and people have been so concerned about when we can see a beginning of a return to the new normal and perhaps the opening of shanghai disneyland next week sets a pathway. It doesnt make it clear when Everything Else is open but at least its a pathway to the reopening which is maybe more encouraging on negative expectations than i would have anticipated. To it will be interesting see how it works around the world. Streaming is a bigger part of what they do. Clarity oning any exactly how disney will make that one work. I think they probably sound too optimistic when it comes to thinking about movie releases but lets talk about the streaming business. Is that a good enough reason to is, to own disney and if it why dont i simply buy netflix . Reason tothe only want disney but it gives you something to look forward to and it reminds you of how this company has far exceeded its media peers in terms of turning out a product and making the transition to more of a digital story. Its not the only reason to own disney. The other things that are getting lost because we are so focused on nearterm events is what an incredible content engine disney is. Nothing against netflix, its a perfect scenario where you can see success of those stories with different price points. Disney has unmatched content, original content which has given them some time with production coming back online. You will see more original stories come to disney plus and there will be exponential growth in disney plus subscribers ahead. I think thats gotten lost in the story given the nearterm crisis. But i think it continues to be a positive story and you will see a longerterm focus in the company. Of disneys 220 3000 jobs go away permanently . 223,000 jobs go away permanently . I dont think they will go away permanently. It will take a long time to rebuild so the vast majority should come back but it could take years because you will not open the parks back where most of these layoffs were. You cannot open back to full capacity until we have some notable event like a vaccine which eases concerns about the crowds. It will take years before we see full recovery. Vonnie i once asked you about the Gaming Companies where we see a diverging performance today. Wellhave been doing really. What do you see in their future . Is this a temporary bump . Do consumers continue to play games after this is all over . Its an interesting question. We have seen divergence and performance. A huge benefity from the shelterinplace. Online has been contributing to growth and maybe we see easing a little bit but i dont think it goes away completely. I think you expand the user base or you have a broader reach because more people are playing these games than ever before. And,of those will stay like with disney, it will not be a light switch where people suddenly go back to concerts and films. The staying at home nature of this will persist for a long while. Fromnk they will benefit that as well. We are staying bullish on activision which is performing better today. It was a bigger raise and it was a much more bullish tone on the outlook of an Electronic Arts. I think thats the reason for the diversions. Both these stocks have performed very well during this crisis. Guy disney is at session highs. Its up nearly 4 right now. A final question, when you release movies at this point, how is disney going to manage this other than pushing them into next year . Is that the right approach . Bittraight to home a little better . Can they monetize that . How does it change the movie really schedule story . I think most of the bigger studios have been outspoken about staying behind the existing windows. Others are expended minting others are experimenting but the vast releases have been rescheduled for later in the year and have not gone direct to. For now, thats largely the case although there will be exceptions here and there. Disney right now is set to open up on july 24, mulan which was scheduled for march. We will know by june if that is the case because they will have to start advertising. The theaters right now or slowly beginning to reopen. We saw an opening in texas and i think we will see more by mid june which is when which is what most of the theater chains are saying. You wonder what will go first, the movie release or the opening of the theaters but from disney, they are willing to open mulan to a limited capacity audience and go ahead with the opening in late july. It also starts the wheel going again. You have to release these movies so in that sense its likely to happen. Makes you wonder about the change of strategy. Thanks very much indeed for joining us. Disney is rolling up session highs but amazing territory today. This is bloomberg. Imie live from new york, vonnie quinn along with guy johnson in london. Lets check the latest headlines. China is firing back about rumors that covid19 escaped from a wuhan lab which they say is a strategy of the Republican Party before the fall election. The Chinese Ambassador to washington called for an end to the blame game over coronavirus and instead urging for the nation to unite to fight the disease and restart the global economy. The numberto look at of global new coronavirus cases, it tops 3. 6 million. The nation is grappling with the question, how and at what pace to reopen their economies and really open up the curves to social restrictions. In spain, the Prime Minister asked parliament on wednesday for permission to extend the state of emergency past may 9. This as the recession is deepening in europes south, italy, spain after record retractions in the First Quarter. In the u. S. , voices are weighing the ongoing risk in the form of infections and death and on the other hand, economic devastation including a depression in the second half of 2020. The voices include the st. Louis fed president as well as president donald trump. In new york city which is the epicenter of the u. S. Outbreak, the average on appointment rate may triple to 12 this year according to the city comptroller with up to more than 900,000 people losing their jobs and this figure is supposed to spike by the end of june. There was news about uber cutting many jobs. Sayingthis with the ceo days like this are brutal. Much,hank you very indeed. Lets go to the auto sector with gm reporting betterthanexpected numbers earlier. These are Quarterly Earnings boosted by a 20 a 27 surgeon pickup sales. Cfo was asked if they can keep up that pace. Inventories are something we are watching. We are wellpositioned on most car lines. Out of out of the strike lowerear and we have had and leaner inventories. Its going to be helpful in a where sales ramp up globally. From a pickup perspective, we find yourself in a situation where we have lower inventories but the good news is, the dealers have gotten very experienced in managing the constraints they see in the product and how to dig deep into inventory and still make sales. Thats the good news. As we think about the plans for return to work, we are targeting may 18, that should address the four whole the shortfall from an inventory standpoint. G. M. Announced it took down money from revolving credit billion. Ke 3 amassing 33 already billion dollars in automotive liquidity. As you look forward, what tells you you will need that extra money . About think abate our liquidity, over the last several years, we said we want to run a strong investmentgrade Balance Sheet and that has come in handy during these times. We did end the First Quarter with a very strong Liquidity Position of 32. 4 billion. We arefficult to say but taking steps to protect whether its revolving dividends and repurchases. These are precautionary measures to make sure we halved additional letters of liquidity. We are comfortable with our Liquidity Position that will even withll into q4 a scenario of zero production. Restart, thea levels of liquidity will recover from here. These actions are precautionary and proactive actions to make sure we have additional liquidity buffers in place. We are focused on safely restarting the plans and get the production up and running. David this pandemic comes along at a time when the Auto Industry and General Motors were going through transformation to autonomous and electric vehicles. You have been investing quite a bit and both of those. Are you changing your Investment Plan on that . Do you have to put that to the side while you deal with the after effects the pandemic . We areutely not, marching ahead in her plans areeb and ab and we committed to an all electric future and all the plans we have outlined recently in our capital s with respect to the exciting products that we will be rolling out, we have seen little to no impact on these. The capital actions we are taking and the austerity actions will not impact the programs you just outlined. We are fully committed to that and frankly, the Balance Sheet we have been maintaining and the Financial Flexibility we have allows us to continue these investments as we go forward in these challenging times. Is theone last issue pace of new production vehicles. Whole thats been a a hallmark is a pace of new vehicles. Will that slow down . We are committed to putting a product that our customers are excited about. That will not change. We put the customer in the center of everything and you will see that continue in the product cadence that comes along here. Vonnie the gmc fo. Its time for our stock of the hour heres taylor riggs. Taylor looking at shares of beyond meet rising 20 after they had earnings after the bell yesterday. Firstquarter sales were not as bad as fear. Sales from restaurant closes were betterthanexpected while stockpiling from consumers. Help the Retail Business you are looking at some of the retail partnerships the company has. Say people are not buying beyond me but they are not eating up or they are going to the stores and buying it to consume at home. That was a division that did well. Some of the problems with this company is that it really is reliant on restaurants. That makes up more than half of its business or given that the Food Service Business like restaurants and schools were shut down, you had a drop in revenue. Again, analysts said it was not as bad as expected. You can see that analysts are mostly positive. Target but the price shorts are only down to about 20 . That is the stock of the hour. This is bloomberg. Guy im guy johnson with vonnie quinn, this is bloomberg markets. Lets go to chicago and figure out whats happening. The big story was what happened in terms of the gasoline draw. Gasoline demand may be coming back a little bit. Atning us now is stan deming kkm financial. Lets talk about the oil story. The gasoline story is interesting because it maybe shows demand is beginning to come back a little bit from the u. S. Economy. How big a positive is that and if we do see some demand coming back, i presume it will take a to work out the crude we have in the tanks. Agreed, it was interesting. We did see quite a reaction to those inventory numbers and they had inventories coming in below 2. 4 billion barrels. Thats an interesting dynamic and pushed the wti contract backup. The market is looking at the rate of increase of Economic Activity versus supply issues. Lets talk about the treasury market. The government will selling off a lot of debt and it will do it at longer duration that many had anticipated. The twentyyear is in the equation. Was the size and duration a surprise . A little bit, we saw quite a reaction when the announcement was made this morning. Certainly, the 20 billion was a bigger number than what was anticipated on the overall scale of the refunding is quite substantial as well. The back under the curve the back end of the curve sold off quite well. Its the sevens, the tens and the 30s that are selling off. Overhavent seen this in 3. 5 weeks so there is adjustments here primarily due to the fact that the size of the offering is bigger than expected. Appreciate your time today, thanks for dropping in. Lets take a quick look at the markets because we have been recovering. We had a meltdown after the opening where we saw the market give up all of its gains and go negative but we are back up to 4 10 of 1 higher. The nasdaq is running away with things. Coming up, we will count you down to the european close and Anthony Phillipson will be with us who is the european trade commissioner. This is bloomberg. Guy live from london, im guy johnson with vonnie quinn in new york. European stocks are largely lower right now and we are off the lows but at least coming back toward the flat line. The london market is higher. Across europe, we are fairly flat. In new york, things started to turn more positive. Of pound is down around 6 10 1 . Germany is giving the reopening story today in terms of what will be happening with a certain degree of trepidation of when we might see a second way. 33 re down by four point and the german 10 year, we are seeing yields climbing back after it was selling off. Vonnie the focus here is on treasuries or at least it was