Austrias chancellor tells us shared debt is not the answer to the coronavirus crisis. Meanwhile, chancellor merrickle here in germany has a workaround for the dispute over e. C. B. Bond buying. Testing times. President trump says the u. S. Has prevailed in the battle to boost coronaVirus Testing to capacity. This as Boris Johnson is forced to water down his plans for rebooting the u. K. Economy. Plus, the fed dips into credit on the corporate side. Today marks the opening of a much anticipated facility to buy corporate debt e. T. F. , a key part of the Central Banks coronavirus strategy. Just you said an hour away from the start of cash equity trading in europe and the u. K. Lets take a look at futures here. Ftse n see that we have futures it is changed. Futures across the board are not moving very much, although at least in europe we see some direction. Everything moving to the down side. And more so when you look at the da x, the ibex and the ftse down a third right now. Take a look at u. S. Futures. You see bigger red arrows there on the dow and sp, each down half a pacific. Ascar futures off. 1 . Anna matt, we have breaking news coming through. Lets start with the aviation sector. Ryan air will restore 40 of flights from the 1st of july. Given the big cutbacks we have seen from the aviation giants, this would be a substantial ramp up, restores 40 of scheduled flights from the first of july. Crew and passengers will wear face masks and pass temperature checks. We have seen such things taking place in many asian airports and imagery of people on planes already wearing masks. But this is coming through from ryan air. We are interested to see how the u. K. Manage the quarantine rules that have come in. Much criticized. Havent come in but will come in from the u. K. Uch criticized by the aviation entry in the u. K. Ryanair is a part of that. There is a common travel area across that irish border. We will have to see how that plays out and what that means for the u. K. s ability to implement some kind of uarantine. We are getting news from the tell come. The divens sent is nine euros. They didnt see a need to cut the divens deployed to get through the difficulties. They say the Economic Impact of covid19 is likely to be significant. Perhaps that is a little more depressive language than some analyst have been looking for. They also say they are not able to provide adjusted guidance for full year 2021. Ey do see adjusted fda for 2021 may be flat to slightly down, and cash flow prespectrum to be at least five billion euros. They are giving us this metric. The organic Services Revenue up by 1. 6 in the fourth quarter. That is better than was estimated, but it is perhaps a little backward looking at that quarter. It runs from january to march. Matt . Matt lets get the bloomberg first word news. Todays top stories off of the terminal. In the u. K. , there is confusion over prm Boris Johnsons plan to get people back to work for a second day in a row. Londons chamber of commerce is telling businesses not to change their plans until there is more information on how to keep staff safe. Companies are also asking for guidelines on what protective equipment to buy. The government is promising to outpipeline arrangements to public transport today, which i believe the prm recommended no one use. The u. S. Has won the battle to ramp up its Virus Testing capacity that. Is according to president donald trump. More than 300,000 daily tests are being conducted as of thursday according to the covid tracking project. But his News Conference also saw a Testy Exchange with reporters. That is nothing new for this president. Deaths in the u. S. Have now topped 80,000. Ferm reserve efficiency are pushing back on the Federal Reserve efficiency are pushing back on the view that rates may go negative. Boston and atlanta dont see the tool being used in the u. S. It comes as the Central Bank Says it will start buying corporate debt in the form of e. T. F. s starting today. The program is coming online as part of the feds mergery coronavirus response. Global news, 24 hours a day on air and a quick day by bloomberg powered by 2700 journalists and analyst in over 120 country. Anna lets get the conversation of the markets. Mark moore joins us from singapore. We have a lackluster session taking place in asia, and that seems to lead to some lackluster futures in the europe and u. S. U. S. Futuring down more. We have recouped about half our losses since the march 23 low, but are we due for another pull back . Goldman sachs saying weekend lose 209 in the next three months. Do you hear people talking about the need for another pullback a lot all . I think we are still in the same situation we have been in the last couple of weeks. What has been interesting is we rebound sod powerfully, so quickly from the march lows that actually the last couple of weeks we have gone nowhere. We have been trading within a couple of of these levels for a couple of weeks. That is strange because normally when you never bear markets, and even if we bounced out it, you experience these volatility clusters. You dont expect to get this massive deadline in the market and sudden stability. I am suspicious if this stability is sustainable. I would have sympathy for Goldman Sachs view. One of the weird things is we have paused at this level where many people expected to the rebound to get to. Which means that neither side can their a victory. The bulls are in a stronger hand cant but they are not up on the european. The market market is down on the year. The market weighted average is down on the year. So bulls cant declare victory, but bears are a little nervous. We are stuck in that nomans land. I still think the next 20 move is more likely to the down side. Matt we are going to talk with jeff henrik son. He is a behavioral economist at the university of axford. Says people really arent looking at the amount of stimulus that is at play here and really not pricing in how much money federal governments and Central Banks are going to use to bring this economy back. What do you think about that view . Mark i have defendant hi heard that perspective out there. I dont think the people arent looking at it i think the people are struggling to understand quite exactly what the real economy impact will be and then also how this means you should trade an commit mamblingt. It is everything that people are looking a lot. It is just that we have never, as far as i know, traded in history, traded equity markets off a slugs ee division. We trade them on earnings and that is relate the to the economy. What they have done is disconnect the the equity market from the economy. We know that we are now trading on some new equation based on stimulus. But what is that equation . What amount of stimulus means what multiple for the equity markets . It is very hard 0 for anyone to say con cluesively based on this new way, it is expensive or cheap. It doesnt matter if you are a bull or a bear, you cant say that con cluesively. Everyone is looking at that. It is naive to say people arent looking at it i think people are struggling to make do a good job of it. Perhaps they are much further ahead on how to analyze that relationship. Matt mark, thank you for joining us. Managing editor. Remember that you, too, can join the debate on the question of the gay. Today they are asking will u. S. , asia or europe stocks do best . Reach out to the team by typing ib plus tv gone on your bloomberg terminal. Coming up, open borders are key to jumpstarting growth. Austrias chancellor spoke to economy eopening the and what he thinks is most important to an economic revival. This is bloomberg. There is a corporation on the european level to support countries like italy, france and spain so that the package of more than 500 billion euros to support these countries, and i hope this will be helpful. Do you think that will be enough, or will there need to be some sort of shared fiscal union in europe to help your second biggest trading partner . Well, i think that this package is good, but we are not in favor of ideas like corona zation debt. Al even if it costs members . How important to you is the member ship of other e. U. Countries like italy . Well, there is no debate about the membership of italy in the European Union. There is a good cooperation, and i think that we will manage this crisis, and we will also be able to manage the economic situation. But of course, it will be an enormous difficult year. Austria, germany, the netherlands, all of these countries were well prepared before the crisis hit, but there are other European Countries like italy and spain which were already in a bad fiscal situation. How much are you prepared to pay in order to keep the European Union together, in order to save those countries that were hit so much harder . Well, it is clear for us that we want to support them and that we want to show solidarity. I think it is good that the ministers for finance agreed on this 500 billion euros package to support these countries. Of course on a european level among the heads of states we are also in a discussion if more help is needed. Do you think it is possible the austerity thaw practiced put you in a good position now. But your second biggest trading partner, italy, has 158 debt to g. D. P. Is it possible for them to get out of that kind of debt trap . How would they possibly do it without some form of Debt Forgiveness or shared debt . Well, they wouldnt be able to handle the cigarette without the help of the European Union and countries like austria, but i dont think that the idea of shared debt is the right answer. How long do you think, mr. Chancellor, it is going to take for economies like the austrian economy to get back to precrisis levels . Now that youve earmarked 38 billion euros, you have more measures to come. When do you see yourselves getting back to precrisis levels . Well, at the moment it is difficult to say because we are quite dependent on tourism. 15 of our g. D. P. In austria is from tourism. There are some Industries Like automotive which has always been hit. So it is difficult to say now, but this year, 2020, will be a very, very difficult year. But we hope that next year in 2021 there will be a positive development again. But probably it could take us a few years. I northwest that you are already preparing measures like tax cuts, possibly infrastructure investment, reopening borders with your neighbors. What do you think is going to be the most important move to revive the economy on the post corona side of the crisis . For us, for sure the reopening of the borders is most important. We need the Single Market of the European Union. We are an exporter country, and that was mentioned before, also tourism plays an Important Role n our country. For the economy in general, but for tourism in particular, reopening the borders is very important. Matt that was the austrian chancellor speaking exclusively to me earlier. He gave us a standard answer on italy. Yes, he encourages solidarity, they have got a 500 billion euro package, and there is no need for shared debt. But the surprising thing, i think, is that he says opening the borders is the most important aspect for revival of the economy. You have to think that not just for austria, but for all European Countries, it is really key to get these borders back open again to really improve trade and get the money flowing . Anna yes. That reliance on tourism is surely a big issue the further south you go in europe. But indeed in austria as you discussed in that conversation. I find it interesting that the narrative around solidarity and shared doesnt seem to have moved that far with northern states versus southern states. It is an imperfect approximation of the debate over coronavirus bondser or other kinds of museumization. It doesnt seems to have moved very far. The spanish minister said we dont need to tap the e. S. M. They are fine raising money on their markets on their own. I wonder if that is not the same. Coming up on the program, we are going to be talking about what the fed is doing. The fed jumped into the e. T. F. Credit market today. We have been waiting for them to get involved in that market. We will talk about what that means for corporate debt. This is bloomberg. Anna welcome back. We are 40 minutes away from the start of the erne equity trading day. Looking lackluster. Is it around trade or evaluations, or is it the fact that stocks have rallied a rot off their lows . Lets talk about what is going on with the fed and the position that they are buying. Today marks the start of the much anticipated move from the fed. The central bank will start buying corporate death e. T. F. It is a big part of the coronavirus lending program. Steen jakobsen jackson us from saxobank. Some people are saying you just need a strategy now that buys what Central Banks are are doing. I am sure it is more complicated in your view . Absolutely. One thing being they are now entering into the junk bond market, and that cascading default effect that will come is going to be interesting to follow six to nine months down the road. But today is the start of the pie program, but it is not the start of the market having bought this already. If you look at the proxy for this, it is trading middle range from precovid and up from the middle of where it was at the low he said of it. So the market is already anticipates this. For me it is clearly more about what the Federal Reserve is going to do with negative interest. I am going to be following this credit element from the cascading sort of the investment credit into the junk bond move and how much the fed s going to end up with for the treasury in the u. S. Matt what do you expect the fed to really move the needle on then, steen . I think first is the control. The amount of issuance we see in the treasure write market indicates that we have a yield steepening going on, which is the market reprising the amount of issuance that is coming from the treasury. Part of that ultimately could lead to a slightly negative view in the 10year sector, which i think will force the Federal Reserve to a control inside the space this year. They will move to control. On the issue of negative Interest Rates, i see a the leadoff the fed governors have been pushing back, but it is kind of i will remember avant. If the market pushes them to negative Interest Rate, the fed will follow them. The fed is not the pragmatist in terms of what it does. If you look at the curve right now, we are trading negative Interest Rates somewhere between december of 2020 and march of 2021. So it will be as it always is. It will be when the market takes fed into negative Interest Rate that will take tate this move. Anna so your think the mark can push the fed in that direction. We have steen the record auction in treasuries, a lot of that coming this week. What will cause volatility in these objection auctions or around treasury markets at this point . There is so much focus on supply. Will we get some volatility around that . It really depends on the officers ability to want to by. Dont forget, we had over the last 48 hours another escalation in the chinau. S. Rhetoric. China has been vague. Another customer has been the g. C. C. As you saw with saudi arabias desperate move on the budget size, they clearly dont have excess funds to play with. Down the line we are in an ok position in terms of the market taking the issuance. But as it pins to be forthcoming, i think the overseas market will take less and lesson this, which pull pit it on the mark to be the domestic savers. They are not famous for having a high saving rate. Matt no. It is true in my case as well. I try and spend just a little more than i make at all times. I wonder what you think about buying u. S. Stokes versus buying i try and focus on europe since i am here, but we just dont have an apple, an amazon, a google, a microsoft. European stocks just dopets have these mega caps. True. And of course it is hurting, and that is what all the outperformance is. A friend of mine has started calling the s p 500 the s p five which is a good analogy to your question. The five names is really everything. I still think if the stock market is really driven by a number of factors, one being that the left curve has been taken out by the Federal Reserve, at least in the short term and the amount of liquidity. But dont forget the Federal Reserve can create liquidity, but they cant create demand in the economy. Anna i think we had a problem with steeps line there. Thank you so much. We are just coming to the end of our conversation. Steen jakobsen, c. Ism o. Of saxobank. Coming up, we we will talk about the u. K. s response. Barry johnson waters down his reopening of the economy plan. They say the work places are not covid secure. We hear a change in tone from the Prime Minister. We will talk about the u. K. Returning to work next. 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. Matt we are getting breaking aaramco. Saudi they are publishing profits. We can see the First Quarter reals right 48 now. Revenue in the quarter, 225. 57 billion. So profit in dollar terms, which may be a little bit easier for you to digest, 16 billion. That is what they made in the First Quarter in dollars terms. The dividend also published and paid in dumars, 13. 4 billion in the First Quarter. So it is a hefty chunk of their profits. They are paying out 13. 4 billion. They made 16 billion. In terms of the Second Quarter dividends, it is going to be even more. 18. 75 billion will be paid out in the Second Quarter according to raamco, although it does see covid19 what hing on its earnings. According to the statement you would have to be blind not to see that. In any case they are confirming that they also see what we all see. They took steps to further optimize capex in 2020, which means bringing that significantly down. They do say they are going to retain significant flexibility to adjust expenditures. It is good to have that any time you are running such an important company. They have identified opportunities to improve operating productivity. Just to repeat, they had 16 billion in profit, paid out 13. 4 billion in dividends, and they plan to play 18. 75 billion in the current quarter. Anna . Anna lets move on from the oil story. We will get back to that ram do story shortly. We will have analysis larltse on this hour. Lets turn our attention to the fight against covid19 and how that runs up against reopening the economy. Boris johnson here in the u. K. Waters down his play for rebooting the u. K. Economy. Unions have told the british prm Prime Minister many businesses arent ready to reopen. He tells employees they should now think about going back to work providing your work place is covid secure and providing you can travel to work safely. Employers cant force staff to return to unsafe environments. We are joined now by kate bell, head of rights international, social and economic. Good to have you with us. Your reaction . Do you see a change of tone . Do you welcome a change of emphasis from the british Prime Minister saying that workers cannot be forced to go back to work places that are unsafe . Well, we have had a very fusing few days across britain. We had a pretty chaotic announcement on sunday, which suggested that workers should go back on monday. Yesterday we did see new guide plinlse published around work place safety, and we see that as a step forward. It is really important to say that workers shouldnt be forced to work in a place that is unsafe. They are listening to what unions have been telling them for weeks around the need for employers to conduct Risk Assessment and to publish that Risk Assessments. Those Risk Assessments still have to happen, and people still need to see them, and we still have to have the uidelines on transport being safe. And whether people can have access to that, too. Still quite a lot to be done before people can feel fully secure about going back to work. Matt you did urge i am trying to remember what he said on sunday, and it was a lot of. It raised more questions than answers as people have been saying. I believe he urged people to avoid Public Transportation . He said much better to drive or even better, walk or cycle to work. Does that mean if you need to take Public Transportation, then you should be staying home . Well, it has been satellitely unclear. That was one of the things that caused the confusion. I think the guidance is slightly clearer now, to avoid public trance port. I love in london, and it is simply not possible for many people in london to be avoiding public transport. Millions of people use it every day to get to work. We are expecting new guidelines on how to transport and maintaining social distancing on transport, which is necessary. There will be questions for people to get to work if transport isnt running, what they are meant to do. We need four they are reassurance on that. Anna we see reports today, kate, that the chancellor might extend the furl owe scheme from the under of june to the end of september, allowing the treasury to pay peoples wages for more months. I suppose that is something you will welcome if we hear that later today . Absolutely. I think what we have plerned over this week is the economy is still going to be restricted for quite a few many months to come basically, and many people who want to be back at work, businesses who want to be open cant be in the foreseeable future. Uring that time, it is vital of pro keeping people in work and protecting leaves. And when it is safe to reopen businesses, they are ready to go. They have trained staff still on the books, and the staff havent experienced a catastrophic hit to their income. That would be a welcome nouns i am. I am looking forward to hearing what the chancellor says this evening. Matt kate, how many people dow expect to remain working how many people do you expect to remain working at home . We have heard from bank c. E. O. s that this is functioning better than anticipated. We have heard from a lot of c. E. O. s that they themselves plan to remain working from home at least some of the time. Is this going to be a new normal . One thing that came from the guidance yesterday and was there on sunday was they said clearly work from home if you can. People have been surprised about how they have been able to work from home and how that has gone much better than expected for many people. I think office work is going to see probably a long period of working from home. That is simply not possible for many people. I think one of the other things we saw this week were those awful mortality statistics showing the kinds of jobs that are facing height ened risk from covid. People who cant really work from home like security guards, taxi drivers, cleaners, care workers, those are the people who we have to be absolutely crystal career that employers have a duty to protect and do the Risk Assessment to make the work places safe. Anna if we see a situation, how do we get the unions and employees and the government on the same page here . If we see recommend ages drawn up and companies can demonstrate that they have followed those recommendations, should staff then feel that everything has been done that can be done to go back to work, and would you then recommend that people do . Absolutely. We know working people would want to go back to work. They want to be working. They want to be earning a livelihood. It is worth remembering that you are taking a big cut of your pay. Probably a fifth of your pay has been cut. People want to go back to work. They want to know it is safe. What we have been calling for all along is to make sure that employers do provide them that reassurance that it is safe, that they have done that Risk Assessments, and they have set out the steps to protect people and that they publish that so people can see what they are doing. People do want to go back to work, and that is what they will do when they know their work place is secure. Matt kate, thanks very much for joining us. Kate bell, head of economics at the trade union as Congress Talking to us about the confusion generated by the Prime Ministers announcement of economic roping on sunday. I lived in london for three public d i never took transportation. Even living in chelsea and working in the city anna but i am not sure that is typical. I am not sure your experience is typical, matt. Matt i am just saying i think a vespa or a bicycle is a much better way to get around. That is just my personal dvice. Great. Very green and quick. Lets get your bloomberg first word news from the bloomberg material natural right now. The u. S. Has won its battle to ramp up its Virus Testing capacity. That is according to president trump. More than 300,000 daily tests are being conducted as of thursday according to the covid tracking judge. His News Conference, as usual, got a little bit testy with reporters. But deaths in the u. S. Have now topped 80,000 and that drives temperatures higher. Federal reserve efficiency are pushing back on the market view that rates may go negative. Both chicagos Charles Evans and atlantas bostick dont see the tool being used in the u. S. This comes as the Central Bank Says it will start buying corporate death in e. T. F. Form today. That program is coming online as part of the feds emergency coronavirus response. But again, more voices, repeating what we have heard over and over again. The Federal Reserve doesnt want to use negative rates. Here in germany, the ancellor, Oscar Mercado angela merrickle overruling. Who should summoned to the judges, the e. C. B. Or the National Central bank . Sources tell us berlin thinks it can be local policy makers who can provide or prove less controversial in a response. Bundesbank it receive seems to be taking a support roll wit the e. C. B. Taking the lead. That will be interesting. Minutes away, just under 20 from the open now. Up next we are going to get your stocks to watch, including allianz after pinco clinets pool almost 50 billion. This is bloomberg. Anna welcome back to bloomberg markets. We are still 15 minutes away from the start of the trading day for this tuesday here in europe. Lets get some of the stocks we are watching. We have been looking at the details of the earnings season. It seems to be calming down a little bit. We are getting some earnings and other announcements from businesses. Lets get to danny. She is a rundouble play. Starting with allianz here, the asset manager seeing massage outflow from its manager, pimco. They oversee a lot of bonds, famous for seeing about 46 billion of outflow over the past quarter. They are also dealing with being an insurer, more people taking claims as the Coronavirus Impact hits people, less people working. Last week they did give their dividend, but still their buyback currently suspended. Matt all right. We have got ryanair as well to talk about. What is going on there . Ryanair is saying they are going to restore 40 of their nights play july 1. This means thousands of flights daily, getting up to 90 percent of their precoronavirus capacity. But one thing here, one caveat they put in. They are saying it is of course subject to government regulation, whether the governments are allowing them and the Health Screening they are able to do. They are going to require crew and passengers to wear masks and take temperature checks. Still again, by july 1, 40 they are hope to go restore flights by. Matt all right. This is personally painful to me. My wife is stuck in spain. She had a Ryanair Flight to may 24. Pushed to may 16th, then may 23rd. Now they are saying july. I dont know how i am going to get her back, but i guess i will have to deal with that myself. Thank you for your help this on the stocks to watch this morning. How do you pull off a merger during a locktown . We spoke to mike, the hibbert global c. E. O. Abouting exactly that. It is a 30 billion deal between libertys u. K. Broadband network, Version Media and o2, the wiles bigs of spains telefonica. Listen to this interview. There is no relationship between the Balance Sheet and what we deliver to consumers. We run our businesses in europe at four to five times leverage and have done so for decades. The key is generating Free Cash Flow the we will generate meaningful cash flow from this combination. We are producing cash at the end of every year. There is no deficit, no impact whatsoever. We invest 20plus percent of our revenue into our consumers and innovation and Technology Every year. I dont see any impact between the Balance Sheet and consumers benefiting. On that investment, you talked about this 10 billion pounds, the combined company is going to be rolling out into ag. How has the Current Crisis changed the expectations about your ability to invest and deploy to ag, but how the governments are going to be issuing 5g. Do they change the cost spectrum . Listen, every country is handling it differently. For the most part this has been an eye opener for governments. Their broadband and mobile provider are critical and essential infrastructure. I dont believe there is anybody today looking to penalize or in any way make it harder to develop next generation infrastructure. Quite the opposite. Trying to make it easier, trying to ensure that companies have the resources and the spectrum they need to deliver even better, faster and more reliable services. Easy, but expensive, right . Well, i am not so sure. If you look at the price of broadband today versus what you were getting 10, 15 or 20 years ago or even five years ago, we are offering on average in the u. K. , 150 megabits per second is the average speed customers re paying for tonight. The price per megabit has come down materially, and the quality of services have only gotten better. I see that trend tipping because it has to continue. It is a competitive mark. We are going to compete with b. T. , motor phones. This combination is is to put customers first, and you dont do that generally pricing is a big part of that. Mike i want to talk about b. T. Because this does put you much more in line with competition against them. You are going to be this combined operator. They said last week they were going to be cutting the dividend for a period of time because of some of the headwinds created by the covid crisis. Are you going to face similar headwinds, and if so, what do you do to mitigate . Well, i cant speak to b. T. s challenges or opportunities. On the other hand, we dont pay a dividend today. It will have a 50 50 ownership structure, and it one be publicly traded. We dont have the legacy headwinds of a capital structure or a dividend. We have been very nimble. Web able to build networks right through the crisis. We had crews in the streets extending our platform, pushing broadband out to other communities. So i think for the most part, i am not going to say business as usual, but the headwinds for us are very dustin. Competition are headwinds for sure. There are specific things we pay taxes on and things like that in the u. K. On our networks, by the organic headwinds we think are manageable here. Anna that was mike fries, liberty flobalt c. E. O. , talking about the i. U. Media space. Up next we will delve into the depails about the earnings of rramco. The energy giant reporting a sharp decline in the First Quarter. We will break down the numbers. This is bloomberg. Matt welcome back to bloomberg markets. This is the european open. We are just about eight minutes to go until the start of cash equities trading. Right now you can see futuring are all pointing down with dax futures losing. 5 . Staud aramco reported a First Quarter profit of 16 billion. It sounds like a lot, but it is a 25 drop year or year after the price of crude plunged in march in part due to the paris war and in part due to the demand slump. The big oil producer says the results nextel the drop in prices, but sticking to its commitments, will be paying out almost 19 billion in dividends. Here is ann marie to discuss. As you say there, it sounds like a big number, 16. 6 billion. This is the worlds most profitable company, but it is a 25 drop year on year and has everything to do with what we have been witnessing the past few months in the oil market, the twin shock on the supply side given the supply wars between saab raburn and russia and the pandemic, and what that means for demand around the world. Bernard looney questioning potentially have we seen peak oil demand. He says he wont write that off. The dividend is important. 18. 75 billion through the First Quarter. That keeps aramco on pledge for fell youre payouts to shareholders of 75 billion. We have seen them already flash spending. Part of that is make sure they keep the sacred dividend in place. One everything they did say as well is looking ahead to the remainder of 2020, aramco expects the impacts of covid19 pandemic on energy demand. We have already seen what happened yesterday. A lot of surprises coming out of the the kingdom on the financial side. We are seeing austerity measures, trastic ones taking place, and the Ministry Said they are going to cut oil out put further, taking them below 7. 59 Million Barrels a day. Eight Million Barrels a day is a red line for saudi arabia. Anna thank you very much. That was an update on what we can expect. We saw some big moves on some of the change in policy that we have seen from the saudis from a fiscal perspective. That had a big impact earlier on this week. We will look to see if we get any movement in aramco then. We have European Equity markets cooled down. The futures market town by around. 4 . We will see if we get weakness coming through. In the asian sector won dower on evaluation, and the fight against covid19 ever present in the minds of investors. Trade tensions also between the white house and china. All of that very to the fore. Nationals of the market open is coming up next. This is bloomberg. Anna a minute to go until the start of European Equity trading day. No joint debt. The chancellor tells bloomberg shared debt is not the answer to the coronavirus. Chancellor merkel has a workaround for the case around the ecb. President trump says the u. S. Has prevailed in the coronaVirus Testing capacity. Forced Boris Johnson is to water down his plan. Today marks the opening of a much anticipated facility to purchase corporate debt come in key part of the coronavirus strategy. What do we see in futures . Matt we see red arrows. Not big size but a direction. Euro stoxx 50 down. Ftse futures doing a little bit better. It does look like we will see the continental indexes fall further at the open than we do the ftse 100. Take a look right now. Markets are opening. Ftse is down. Or 0. 2 . 0. 1 , spain. Ook at the ibex ibex futures are a little bit higher currently. The only continental index showing a green arrow on futures. You can see the cash trade was up momentarily and is now back down. Down 0. 4 . Looks like the ibex is swinging between gains and losses in madrid but otherwise we are seeing European Equity indexes including the ftse fall zero aboutpercent 0. 4 to 0. 5 . Anna checking in on aramco. From aramco. The stock on the move. Up by 0. 3 . We will see how the market digests the latest from aramco. The company took further steps apex. Timize 2020 c paying a dividend for the First Quarter. Saudiaramco profit aramco profit took a 25 plunge. The stock is making a small move to the upside, about 0. 3 . That is get to the Broader Market picture. Opening broadly lower. As concerns over a new pickup in the virus justifies concerns. Froms talk to esty dwek natixis. Global equities sold off from march into april and know they have recouped about half of the losses they have made since the march low. Do we had higher from here . Is there a enough solid information to take us higher . I think we are probably going to see some consolidation and probably with a little more volatility in the coming weeks because we have priced in a lot of the good news already. Especially a lot of the stimulus. ,arkets are looking forward looking to 2021 but there are still a lot of question marks. Bout 2020 given the size of the rebound and given that it is consensus that we will get a move down, it might not be as strong on the way down as we wouldve expected a month ago but at some point, volatility will pick up. Matt what kind of second leg down . What size are you seeing . Esty there are two views. Is view says there rally that it is moving down and then there is a concern that people have missed the rally. So that i dont think we go back to the march 23 lows. , we saw a reports from the white house that they are taking measures to stop government Retirement Funds in the United States from investing in chinese stocks. It has been on the back burner and now it is back up again between china and the United States. Are you watching the trade deal that was signed at the beginning of the year hoping it will not unravel the for the elections in november . How focused are you on trade . Esty i think we have seen in the last few weeks when the trade headlines popped up, youre seeing some of the bigger markets reactions. There was hope at the beginning that you would have a more coordinated Global Support and it might help with the trade relations. That they might ease a little further because we are all in the same boat. But what we have seen in the last few weeks is the opposite and tensions have been exacerbated. We are keeping an eye on the trade deal. Im not sure it was the first phase signed that was in thation and im not sure this is how the u. S. Would respond given what the u. S. Economy is already facing but from a sentiment perspective, i think the trade situation will remain on the minds of investors and it could be a catalyst that leads sentiment a little more fragile and bearish than what we have seen recently. Be thinking about the u. S. Election. It is still a few months away by obviously but obviously, the situation could interior rate if donald trump gets deteriorate if donald trump gets reelected. Matt the question of the day on the mliv blog is do you prefer u. S. , asia, or europe . U. S. Uest earlier said the has an advantage. And that is what is driving sentiment right now. What do you think . Esty i agree. When you look at the number of stocks pulling the market up, it is a lot of technology, biotech those stocks will continue because it will take a long time to get back to normal and a lot of these companies were pretty much already set up for this work from home ors day at home spending. The growth patterns are going to be much more secure than other areas. Rich. Ions are that does that has not stopped a rally in the past. What we are seeing in the short term is you want to be a part of the rally. We think it is a bit early. We want to be a bit more cautious. If you want to be a part of the rally, investors are focusing on , and qualityses and i think that gives an advantage to the u. S. We are going to keep you with us. Borders are the key to starting growth. I was surprised by this. I asked the austrian chancellor earlier what he thought was most important when it comes to reopening the economy. Cut,mulus kick, a tax Infrastructure Projects or opening the borders between italy and austria or germany and austria. Was the keylatter and that may hold true for other countries, certainly in the south. We will hear more about that next. This is bloomberg. Matt welcome back to the european open. 10 minutes into the session and you can see there are some mixed markets with the ftse and milan trading higher. The ibex also. And the ftse is unchanged. In austria, the economy may take a few years to reach precrisis levels while open borders will be the key to jumpstarting Economic Growth in the country and the European Union according to the chancellor of austria, sebastian kurz. I spoke to him exclusively earlier. He also says italy cannot handle the debt load without european assistance. But shared debt is not the answer. Take a listen. Chancellor kurz there is a good cooperation on the european level to support countries like italy, france, and spain so there is a package of more than 500 billion euros to support these countries in the hope that this will be helpful. Matt do you think that will be a not . Or does there need do you think that will be enough . A jointthere need to be union . Chancellor kurz i think this package is good but we are not in favor of corona bonds. Italyeven if it costs european membership . How important to you is the european membership of other countries like italy . Chancellor kurz there is no debate about the membership of countries like italy. There is Good Corporation and i think we will manage this crisis and we will also be able to manage the economic situation. , it will be with an enormous difficulty yet. Matt austria, germany, and netherlands were well purport were well prepared before the crisis hit but other countries like italy and spain were already in a bad fiscal situation. How much are you prepared to pay in order to keep the European Union together . In order to save those countries hit so much harder . Chancellor kurz it is clear to us that we want to support them and show solidarity. I think it is good that the ministers of finance agreed on this 500 billion euro package to support these countries and of course on the european level among the heads of state we are also in discussion if more help is needed. Matt do you think it is austerity that you practice put you in a good position now but your secondbiggest trading partner, debt to gdp. How can they get out of this without some sort of shared debt or Debt Forgiveness . Chancellor kurz they would not be able to handle the situation without the help of the European Union or countries like austria that i do not think the idea of shared debt is the right answer. Matt how long will it take for a economies like the austrian economy to get back to precrisis level . You have more measures to calm. Ome. When do you see yourself getting back to precrisis levels . Chancellor kurz at the moment, it is difficult to say because we are dependent on tourism. 15 of our gdp in austria is tourism. The Automotive Industry has also been hit but this year will be difficult but ,e hope that the next level 2021, there will be a positive development again. Probably it could take us a few years. Matt i know you are already preparing measures like tax cuts, infrastructure, opening borders with your neighbors what do you think will be the most important move to revive the economy on the post corona side of the crisis . Chancellor kurz for us, reopening the borders is the most important. Tourism and exports. For the economy in general but ism in particular, opening borders is important. Of global dwek, head natixis isith na still with us. He makes a good point. I want to go hiking and purchase i can see thata, they need consumer is coming back into the country. Is it is important for other countries in the eu . Is open borders holding back an economic revival . Esty to a certain extent, absolutely but not that many countries seem as open as austria at the moment about reopening borders. I think the second wave and not being able to contain it is still taking precedent. In a month or so, let us see as we come closer to School Holidays how different government approach this. Au definitely need to have slow. But how safe do people feel about traveling . It is one of the steps but this contagion, the second wave, the fears and the confidence will remain big hurdles for quite a while. Up howiment is way safe do people feel about traveling and how secure do they feel in their employment . I wonder about the Unemployment Rate. U. S. Unemployment numbers hit headlines on friday. In europe, will we end up with a lower Unemployment Rate or will that joblessness be delayed in europe . Esty i think it will most likely be delayed. To be more sticky employment in europe. And the Unemployment Rate took a lot longer to go down. Not reaching the levels as the u. S. But the u. S. Markets that should hopefully allow us to start quicker when it can restart and i think the speed of this will be the big question. In europe, a lot of the programs have tried to suspend in time this employment picture. A lot of these jobs we dont know how long it will take to get back to normal. Clearly, it is months and quarters and not weeks. We dont know how much damage we will have from this crisis. If you could pause this for three months and go back to normal is a little optimistic. In time, we think the u. S. Will end up on the better side. There will probably be less longerterm consequences. But u. S. Data is more timely than europe which makes it more difficult for comparison. It is all about structure. Consumption in the u. S. Tends to pick up. I would not bet against the u. S. Consumer. And for that, there are better prospects for jobs as well. Matt a good point. And we had a story yesterday on the bloomberg pointing out that here in germany we think the program will save jobs but one in five German Companies has in april. G employees there is a study out saying it is not helping as much as you would expect it to. Esty dwek, head of global stays withom natixis us. We will talk about the fed jumping into the credit market, the Corporate Credit market. It is going to buy etfs. We will talk about what that means for global debt investors. This is bloomberg. Matt welcome back to bloomberg markets. This is the european open. Trading daynto the and equity indexes are turning higher. The ftse up 0. 6 . As well. Ins in milan the ibex 35 index paintballs a 06 . Ng up a gain of that is get the Bloomberg Business flash. Top corporate stories. Saudi arabia aramcos reported a 25 drop in firstquarter profits. As the price of crude plunged due to the price war and the coronavirus. Income declined to less than 17 billion. The Saudi Oil Giant says it is still on track to meet its dividend pledge. Of 17year payout billion 70 billion. Ryanair will restore 40 of its scheduled flights but not until july 1. To plans are subject government restrictions and Health Measures being put in place. Says crew and passengers will have to pass temperature checks and where facemasks. Vodafone cap sales growing and it is still pressing epts sales growing and is still pressing ahead. The company also wants to streamline setting a new goal in annual cost savings within the next three years. And that is your business flash. Today marks the start of Federal Reserve . You read my mind. By yang will start corporate debt etfs. It is part of the program. Today marks the start of a muchanticipated move from the fed so let us talk to as the black, head of Global Market strategy at natixis who is still with us. The fed has supported the market in various ways but you do not think we will see negative Interest Rates. Our earlier guest felt the market might push the fed into negative Interest Rate policy. What is your video . What is your view . Esty i hope not. Quited already cut aggressively in february and march down to zero. They had a lot of room to cut as opposed to other Central Banks. President s came out yesterday and said it seems far from their mind to have negative Interest Rates. It is similar to the past. The market should not be pressuring the fed to cut into negative rates. The fed has gone above and beyond any expectations we or the market could have had covering pretty much every sentiment of the bond market. Youre talking about corporate etfs at the moment but they have covered every area possible. Id. Think negative rates are the solution for the u. S. I dont think negative rates are the solution for the u. S. It has eased stress in bond markets. Gilts and spreads across Corporate Bonds have come down on the knowledge that the fed will step in as needed. I dont think it is in the plans. Never say never but i think there are a lot of other tools the fed would rather use before they think of that. Matt absolutely. Esty, thank you for joining us. Esty dwek from no takes us will join me on Bloomberg Radio at 9 00 a. M. So tune in for that. Matt welcome back to bloomberg markets. This is the european open. Bit of aeen a little turnaround in terms of equity indexes of across europe. We were looking at mostly red arrows at the open and now everything is up being led by the witches rising the most. On the continent. In terms of the dax and the cac. Is upse 100 in london about 0. 5 . The stoxx 600, the european benchmark index gaining about 0. 3 . Looking at the sectors on the stoxx 600, you can use the grr function and most are gaining. Telecoms, health care, and utilities are up. Defensive stocks. A defensive play moving higher. On the downside, real estate, travel and leisure. As well as basic resources that are falling. Let us get the bloomberg first word news. Here are todays top stories off the terminal. In the u k, there is continued k. There is. Continued conversion. Commercen chamber of is telling people not to change their plans until there is more information about how to keep staff safe. Companies are asking for direction on what protective equipment to purchase. There are questions about Public Transportation. Im getting a lot of emails from bloomberg clients about riding bicycles long distances. The u. S. Has won the battle to ramp up its Testing Capacity according to donald trump. Were than 3000 daily tests are according tocted the tracking project. His News Conference saw a Testy Exchange with reporters. Nowhs in the u. S. Have topped 80,000. Federal reserve officials are pushing back once again on the market feel that rates market view that rates may go negative. Charles evans and Raphael Bostic dont see that will be in used in the u. S. The Central Bank Says it will start purchasing corporate debt in the form of etfs. The program coming online as members respond. 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. Anna . Anna let us talk about what is going on at aberdeen. Net outflows in the first four months at about 24 billion pounds. Poundsng in 25 billion its all inflows of one billion pounds. Joining us now is keith skeoch, the ceo at Standard Life aberdeen. Great to have you with us. Great to speak to you. You describe the inflows and beenows data i have through as an encouraging signal today. The day of your atm. Why are you encouraged . Ith thank you end it is a pleasure to be care. I think it is encouraging because during so much turbulence, clients are remaining relatively calm. Our performance has held up and to see confidence from our clients sticking with us and sending us some new money is encouraging. Matt why do you think they are doing that . About hat it is all is there fomo . If we see another dip, will you get more . Most of our clients are longterm and i think they are oning a view to some extent the longerterm pace of recovery. Making sure there is an opportunity. The other thing going on is we are seeing money market funds with houses with good performance and strong balance as important. N i think it is about confidence in the longterm. I dont get any sense that our client base is making shortterm decisions. They are thinking about the medium term. Keith, you also said in your Statement Today that the external environment may impact the phasing of some activities this year. What impact are you talking about . Keith it is modest. Seven or eight weeks, we have moved to asiapacific having 99 of our people working from home. Quite a lot ofot heavy lifting to do. I think that broadly on track but inevitably as you put in offerent elements integration and process and as that is just going to take a bit of a rework. ,ut as far as i can see today eight weeks into this crisis, that feels like that is going to be modest. Clients whore your normally would be investing in real estate think about this whole working from home situation . So many companies, im sure Standard Life aberdeen is among them, have had Great Success working from home and realize that the overhead of commercial. Etail may be a little too much keith one of the things we have learned is that the days, i suspect of those old continuity sites where you had a lot of space have gone because through modern technology and the ability of our people to make that technology work, they can work from home. It remains to be seen of course whichr that is something in terms of the communities that people operate in and the way in connection, find how much that will have an impact. I do suspect that Going Forward as we think about the return to work, the economics of the workplace are going to change. Plans may change forever. Though certainly, we are thinking about not just how we can get our people back but actually what does that mean for the shape of the ergonomics within the business and that will obviously have a knock on effect on the demand for property space. We will see how this lands over the next few months. We have an impact on demand for property but does it also have an impact on the real estate funds . Are we ever going to get sound valuations for those . Eith we will i think eventually when markets normalize. But as we have seen from news overnight from south korea etc. , this is going to be i think a long haul and these difficult times will remain in place. We come of the areerty valuers working with the regulators to make sure we can get the valuation for Property Funds on a sound basis. And as ive said several times before, i think we will come out of this crisis with some records for Property Funds. Is aboutort time, it making sure we do the right thing for clients and also attempts to do the right thing for tenants in these difficult times. Matt what are your clients thinking about fixed income funds . Or what do you expect to happen with fixed income funds . Keith i think what youre going to see is we saw quite a strong improvement with the rebound in credit throughout april throughout april and a real focus on the quality names. And really strong Balance Sheets. So, i think that is going to be a major differentiator as we go forward. There is no doubt in my mind that one product of the covid crisis is obviously going to be a recession. A prolonged period of low Interest Rates. And so there will be a reach for yield but i suspect as a result of what happened in march, the focus on quality and resilience of the Balance Sheet will be of increased importance and that will stay with us for some time. Anna how does all of that play out in the battle . About your new active business. How is that developing . A broader focus on products and regions. What about the new active side . Now is absolutely the time for the new active. One thing that i think is really as atant to get across message is you will not see the benefits of new active coming through in performance either next month or over the next quarter. Active managers at the moment are spending their time doing the research, looking at the names, who is going to be a winner, who might need Better Capital to do that. I think the benefits of active management will reveal themselves over the next couple of years and active membership in my view at the moment it is time for highquality stock picking. Answer that, it makes me think also of the for yourty of m a business. When you look out there and see competitors that may not be so steady on their feet right now in a business area, you want to bulk up sla, do you see anything you like . Which business areas do you want to improve with m a now that you have these opportunities . Which regions would you want to beef up . Isth the first thing to say we really are not that interested in bulk. If there is an issue it is about scale and it is about thinking about where you can add to your investment capabilities so that you can continue to diversify your Revenue Streams and support clients. So, i think we are in the middle of a bear market rally at the moment and i suspect that there is a bit more noise and volatility to come down the track. The realtime to be thinking about what you might or might not do is probably in the second half of the year. I have to say in the short run given the debt and the unparalleled nature of this crisis, my focus is on keeping and as we think about the return to work and making sure that as they are safe, they can provide high serviceperformance and for our clients. And that is pretty much where our focus is for the short term. To hear. T is good the place to keep your priorities for sure. Eoch, the ceo of Standard Life aberdeen. Investors see past the overall market sentiment. We speak to the founder of thorpe abbots capital, jeff henriksenn jeff joins us next. This is bloomberg. Matt welcome back to the european open. 47 minutes into the session and we are looking at mixed markets not moving much at all. Let us talk about behavioral economics, fascinating during this crisis. Jeff henriksen is the founder of thorpe abbots capital. Philosophy centers on understanding the behavioral factors behind ms ispricing. One of the things i saw in your notes i thought was interesting is you do not inc. The market has priced in or realized the full force of fiscal stimulus coming from federal governments and Central Banks around the world. Is that the case . Jeff good morning. They are pricing it more in now than they were a month ago but when i talk to people that i know, so many people despite the rally are very bearish. Outside of 2008 or 2009, 1 of the most hated rallies we have seen. Nearly ass not attractive as it was at the end of march, i think there are still tremendous opportunities. People are reason is theyoking to rally are not taking into account the true impact the policy response will have. To us when it became clear in late march that the government in the u. S. Was essentially going to do everything they can to shepherd both the supply and demand side of the economy across this massive economic black cold we are currently seeing. To us, that was a game changer and i still think people are underestimating how powerful that can be. There will be longterm consequences to that we should be talking about that i think there is still an underestimation of what the government, especially monetary authorities are willing to do, absolutely. Matt it makes me think of something we say back home in the states. Watern lead a horse to but you cannot make it drink. What do you think consumers will act like here as these lockdowns start to ease . Even if im allowed to go to a restaurant, get in a plane, get a pedicure, am i going to do all of those things . Parts tore are two that. One, do you have the financial wherewithal and income to spend . And the behavioral element is whether you would like to engage in those activities you mentioned. On the spending side we have seen and will continue to see the Government Support incomes and spending power to the best of their ability. If we see a reasonably robust economic recovery, the spending power will return over time. Whether people want to go and have a restaurant meal i tend to be more optimistic about behavior going back to not 100 normal but i think there are a lot of people and i think they are extrapolating and getting bogged down with a bias. They are believing there is a world post covid that will look precovidke the world. There is a thing called social proof when you see other people around you behaving in certain ways, it makes it more likely that you will think it is ok to behave that way. You may go to a restaurant slowly reopening and you dont want to go. You see a few more people and you decide to give it a shot. And you go in and have a meal and you dont get sick and slowly people think we are coming out of this. Spreadingus is rapidly through this, that will be the case but if the virus gets under control and people realize they can go back to certain behaviors. The more normal it will feel. Two years from now, i would be was going to one restaurants. I think it will be a slow process but i think people want need social reaction social interaction. Companiessinesses and and stocks that are being priced as if the probability of that happening is low i think there are opportunities in those names assuming the company has the wherewithal to bridge this economic does it or black economic desert or black coal. All right, jeff i know you were going on Bloomberg Radio so i recommend our viewers switch over and listen to you on the radio right now. Jeff henriksen is an associate business oxfords school. He is a behavioral economist. It is fascinating to hear what he has to say during this unprecedented crisis. Up next, we will get some of the movers in this market. Rising debt is eating into the money this giant hoped it would fund the turnaround. This is bloomberg. Anna welcome back to European Market open. A negative session for the European Equity markets. Right now, we have European Equity markets up. A bit of a turnaround. In terms of what is leading disclosing vodafone sales and the First Quarter going ahead of asset sales. Thyssenkrupp the loss is deepening. It was meant to fund the turnaround. Those are the stocks we have in focus today. In focus, coming up anrveillance exclusive interview coming up in a few minutes time and i am heading over to radio. Tune in to london. 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. Francine the u. S. Prevailed in the battle to boost coronaVirus Testing print Boris Johnson we speak with the chairman of Standard Chartered on what will take. Austrias chancellor tells bloomberg that debt is not the answer to the spread. Good morning and welcome to bloomberg survllce